Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Oct. 25, 2015 | Dec. 03, 2015 | Apr. 26, 2015 | |
Document and Entity Information [Abstract] | |||
Entity Registrant Name | APPLIED MATERIALS INC /DE | ||
Entity Central Index Key | 6,951 | ||
Current Fiscal Year End Date | --10-25 | ||
Entity Filer Category | Large Accelerated Filer | ||
Document Type | 10-K | ||
Document Period End Date | Oct. 25, 2015 | ||
Document Fiscal Year Focus | 2,015 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false | ||
Entity Common Stock Shares Outstanding | 1,149,133,389 | ||
Entity Well Known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Public Float | $ 26,764,127,442 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) shares in Millions, $ in Millions | 12 Months Ended | ||
Oct. 25, 2015 | Oct. 26, 2014 | Oct. 27, 2013 | |
Income Statement [Abstract] | |||
Net sales | $ 9,659 | $ 9,072 | $ 7,509 |
Cost of products sold | 5,707 | 5,229 | 4,518 |
Gross profit | 3,952 | 3,843 | 2,991 |
Operating expenses: | |||
Research, development and engineering | 1,451 | 1,428 | 1,320 |
Marketing and selling | 428 | 423 | 433 |
General and administrative | 455 | 497 | 458 |
Loss (gain) on derivatives associated with terminated business combination | (89) | (30) | 7 |
Impairment of goodwill and intangible assets | 0 | 0 | 278 |
Restructuring charges and asset impairments | 14 | 5 | 63 |
Total operating expenses | 2,259 | 2,323 | 2,559 |
Income from operations | 1,693 | 1,520 | 432 |
Interest expense | 103 | 95 | 95 |
Interest and other income, net | 8 | 23 | 13 |
Income before income taxes | 1,598 | 1,448 | 350 |
Provision for income taxes | 221 | 376 | 94 |
Net income | $ 1,377 | $ 1,072 | $ 256 |
Earnings per share: | |||
Basic (in dollars per share) | $ 1.13 | $ 0.88 | $ 0.21 |
Diluted (in dollars per share) | $ 1.12 | $ 0.87 | $ 0.21 |
Weighted average number of shares: | |||
Basic (in shares) | 1,214 | 1,215 | 1,202 |
Diluted (in shares) | 1,226 | 1,231 | 1,219 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) $ in Millions | 12 Months Ended | ||
Oct. 25, 2015 | Oct. 26, 2014 | Oct. 27, 2013 | |
Statement of Comprehensive Income [Abstract] | |||
Net income | $ 1,377 | $ 1,072 | $ 256 |
Other comprehensive income (loss), net of tax: | |||
Change in unrealized net gain on investments | (10) | (1) | 9 |
Change in unrealized net loss on derivative instruments | (15) | (2) | 1 |
Change in defined and postretirement benefit plans | 0 | (33) | 18 |
Change in cumulative translation adjustments | 9 | (2) | (5) |
Other comprehensive income (loss), net of tax | (16) | (38) | 23 |
Comprehensive income | $ 1,361 | $ 1,034 | $ 279 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Millions | Oct. 25, 2015 | Oct. 26, 2014 |
Current assets: | ||
Cash and cash equivalents | $ 4,797 | $ 3,002 |
Short-term investments | 168 | 160 |
Accounts receivable, net | 1,739 | 1,670 |
Inventories | 1,833 | 1,567 |
Other current assets | 724 | 568 |
Total current assets | 9,261 | 6,967 |
Long-term investments | 946 | 935 |
Property, plant and equipment, net | 892 | 861 |
Goodwill | 3,302 | 3,304 |
Purchased technology and other intangible assets, net | 762 | 951 |
Deferred income taxes and other assets | 145 | 156 |
Total assets | 15,308 | 13,174 |
Current liabilities: | ||
Short-term debt | 1,200 | 0 |
Accounts payable and accrued expenses | 1,833 | 1,883 |
Customer deposits and deferred revenue | 765 | 940 |
Total current liabilities | 3,798 | 2,823 |
Long-term debt | 3,342 | 1,947 |
Other liabilities | 555 | 536 |
Total liabilities | $ 7,695 | $ 5,306 |
Commitments and contingencies (Note 15) | ||
Stockholders’ equity: | ||
Preferred stock: $.01 par value per share; 1 shares authorized; no shares issued | $ 0 | $ 0 |
Common stock: $.01 par value per share; 2,500 shares authorized; 1,160 and 1,221 shares outstanding at 2015 and 2014, respectively | 11 | 12 |
Additional paid-in capital | 6,575 | 6,384 |
Retained earnings | 13,967 | 13,072 |
Treasury stock: 793 and 717 shares at 2015 and 2014, respectively | (12,848) | (11,524) |
Accumulated other comprehensive loss | (92) | (76) |
Total stockholders’ equity | 7,613 | 7,868 |
Total liabilities and stockholders’ equity | $ 15,308 | $ 13,174 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Oct. 25, 2015 | Oct. 26, 2014 |
Stockholders’ equity: | ||
Preferred stock, par value per share (in dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 1,000,000 | 1,000,000 |
Preferred stock, shares issued | 0 | 0 |
Common stock, par value per share (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 2,500,000,000 | 2,500,000,000 |
Common stock, shares outstanding | 1,160,000,000 | 1,221,000,000 |
Treasury stock, shares | 793,000,000 | 717,000,000 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity - USD ($) shares in Millions, $ in Millions | Total | Common Stock | Additional Paid-In Capital | Retained Earnings | Treasury Stock | Accumulated Other Comprehensive Income (Loss) |
Beginning Balance, Shares at Oct. 28, 2012 | 1,197 | 699 | ||||
Beginning Balance at Oct. 28, 2012 | $ 7,235 | $ 12 | $ 5,863 | $ 12,700 | $ (11,279) | $ (61) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income | 256 | 256 | ||||
Other comprehensive income (loss), net of tax | 23 | 23 | ||||
Dividends | (469) | (469) | ||||
Share-based compensation | 162 | 162 | ||||
Issuance under stock plans, net of a tax benefit (detriment), shares | 25 | |||||
Issuance under stock plans, net of a tax benefit (detriment) | $ 126 | 126 | ||||
Common stock repurchases, shares | 18 | (18) | 18 | |||
Common stock repurchases | $ (245) | $ 0 | $ (245) | |||
Ending Balance, Shares at Oct. 27, 2013 | 1,204 | 717 | ||||
Ending Balance at Oct. 27, 2013 | 7,088 | $ 12 | 6,151 | 12,487 | $ (11,524) | (38) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income | 1,072 | 1,072 | ||||
Other comprehensive income (loss), net of tax | (38) | (38) | ||||
Dividends | (487) | (487) | ||||
Share-based compensation | 177 | 177 | ||||
Issuance under stock plans, net of a tax benefit (detriment), shares | 17 | |||||
Issuance under stock plans, net of a tax benefit (detriment) | $ 56 | 56 | ||||
Common stock repurchases, shares | 0 | |||||
Common stock repurchases | $ 0 | |||||
Ending Balance, Shares at Oct. 26, 2014 | 1,221 | 717 | ||||
Ending Balance at Oct. 26, 2014 | 7,868 | $ 12 | 6,384 | 13,072 | $ (11,524) | (76) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income | 1,377 | 1,377 | ||||
Other comprehensive income (loss), net of tax | (16) | (16) | ||||
Dividends | (482) | (482) | ||||
Share-based compensation | 187 | 187 | ||||
Issuance under stock plans, net of a tax benefit (detriment), shares | 15 | |||||
Issuance under stock plans, net of a tax benefit (detriment) | $ 4 | 4 | ||||
Common stock repurchases, shares | 76 | (76) | 76 | |||
Common stock repurchases | $ (1,325) | $ (1) | $ (1,324) | |||
Ending Balance, Shares at Oct. 25, 2015 | 1,160 | 793 | ||||
Ending Balance at Oct. 25, 2015 | $ 7,613 | $ 11 | $ 6,575 | $ 13,967 | $ (12,848) | $ (92) |
Consolidated Statements of Sto7
Consolidated Statements of Stockholders' Equity (Parenthetical) - USD ($) $ in Millions | 12 Months Ended | ||
Oct. 25, 2015 | Oct. 26, 2014 | Oct. 27, 2013 | |
Statement of Stockholders' Equity [Abstract] | |||
Tax benefit (detriment) included in issuance under stock plans | $ 55 | $ 27 | $ 14 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Millions | 12 Months Ended | ||
Oct. 25, 2015 | Oct. 26, 2014 | Oct. 27, 2013 | |
Cash flows from operating activities: | |||
Net income | $ 1,377 | $ 1,072 | $ 256 |
Adjustments required to reconcile net income to cash provided by operating activities: | |||
Depreciation and amortization | 371 | 375 | 410 |
Impairment of goodwill and intangible assets | 0 | 0 | 278 |
Restructuring charges and asset impairments | 14 | 5 | 63 |
Excess tax benefits from share-based compensation | (56) | (30) | (23) |
Deferred income taxes | (134) | 58 | (102) |
Other | 39 | 8 | 34 |
Share-based compensation | 187 | 177 | 162 |
Changes in operating assets and liabilities, net of amounts acquired: | |||
Accounts receivable | (61) | (21) | (404) |
Inventories | (266) | (154) | (141) |
Other current and non-current assets | 26 | 26 | (63) |
Accounts payable and accrued expenses | (133) | 79 | 21 |
Customer deposits and deferred revenue | (175) | 146 | 39 |
Income taxes payable | (24) | 142 | 57 |
Other liabilities | (2) | (83) | 36 |
Cash provided by operating activities | 1,163 | 1,800 | 623 |
Cash flows from investing activities: | |||
Capital expenditures | (215) | (241) | (197) |
Cash paid for acquisitions, net of cash acquired | (4) | (12) | (1) |
Proceeds from sale of facilities | 0 | 25 | 7 |
Proceeds from sales and maturities of investments | 1,100 | 878 | 1,013 |
Purchases of investments | (1,162) | (811) | (607) |
Cash provided by (used in) investing activities | (281) | (161) | 215 |
Cash flows from financing activities: | |||
Debt borrowings, net of issuance costs | 2,581 | 0 | 0 |
Proceeds from common stock issuances and others, net | 88 | 107 | 159 |
Common stock repurchases | (1,325) | 0 | (245) |
Payments of dividends to stockholders | (487) | (485) | (456) |
Excess tax benefits from share-based compensation | 56 | 30 | 23 |
Cash provided by (used in) financing activities | 913 | (348) | (519) |
Increase in cash and cash equivalents | 1,795 | 1,291 | 319 |
Cash and cash equivalents — beginning of year | 3,002 | 1,711 | 1,392 |
Cash and cash equivalents — end of year | 4,797 | 3,002 | 1,711 |
Supplemental cash flow information: | |||
Cash payments for income taxes | 407 | 195 | 196 |
Cash refunds from income taxes | 12 | 111 | 102 |
Cash payments for interest | $ 92 | $ 92 | $ 92 |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Oct. 25, 2015 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Principles of Consolidation and Basis of Presentation The consolidated financial statements include the accounts of Applied Materials, Inc. and its subsidiaries (Applied or the Company) after elimination of intercompany balances and transactions. All references to a fiscal year apply to Applied’s fiscal year which ends on the last Sunday in October. Fiscal 2015, 2014 and 2013 each contained 52 weeks. Each fiscal quarter of 2015, 2014 and 2013 contained 13 weeks. Certain prior year amounts have been reclassified to conform to current year presentation. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make judgments, estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ materially from those estimates. On an ongoing basis, Applied evaluates its estimates, including those related to accounts receivable and sales allowances, fair values of financial instruments, inventories, intangible assets and goodwill, useful lives of intangible assets and property and equipment, fair values of share-based awards, and income taxes, among others. Applied bases its estimates on historical experience and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Cash Equivalents All highly-liquid investments with a remaining maturity of three months or less at the time of purchase are considered to be cash equivalents. Cash equivalents consist primarily of investments in institutional money market funds. Investments All of Applied’s investments, except equity investments held in privately-held companies, are classified as available-for-sale at the respective balance sheet dates. Investments classified as available-for-sale are recorded at fair value based upon quoted market prices, and any temporary difference between the cost and fair value of an investment is presented as a separate component of accumulated other comprehensive income (loss). The specific identification method is used to determine the gains and losses on investments. Interest earned on cash and investments, as well as realized gains and losses on sale of securities, are included in interest income in the accompanying Consolidated Statements of Operations. Equity investments in privately-held companies are generally accounted for under the cost method of accounting and are periodically assessed for other-than-temporary impairment when an event or circumstance indicates that an other-than-temporary decline in value may have occurred. Allowance for Doubtful Accounts Applied maintains an allowance for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments. This allowance is based on historical experience, credit evaluations, specific customer collection history and any customer-specific issues Applied has identified. Changes in circumstances, such as an unexpected material adverse change in a major customer’s ability to meet its financial obligation to Applied or its payment trends, may require Applied to further adjust its estimates of the recoverability of amounts due to Applied. Bad debt expense and any reversals are recorded in marketing and selling expense in the Consolidated Statement of Operations. Inventories Inventories are stated at the lower of cost or market, with cost determined on a first-in, first-out (FIFO) basis. Applied adjusts inventory carrying value for estimated obsolescence equal to the difference between the cost of inventory and the estimated market value based upon assumptions about future demand and market conditions. Applied fully writes down inventories and noncancelable purchase orders for inventory deemed obsolete. Applied performs periodic reviews of inventory items to identify excess inventories on hand by comparing on-hand balances to anticipated usage using recent historical activity as well as anticipated or forecasted demand. If estimates of customer demand diminish further or market conditions become less favorable than those projected by Applied, additional inventory adjustments may be required. Property, Plant and Equipment Property, plant and equipment is stated at cost. Depreciation is provided over the estimated useful lives of the assets using the straight-line method. Estimated useful lives for financial reporting purposes are as follows: buildings and improvements, 3 to 30 years; demonstration and manufacturing equipment, 3 to 5 years; software, 3 to 5 years; and furniture, fixtures and other equipment, 3 to 15 years. Land improvements are amortized over the shorter of 15 years or the estimated useful life. Leasehold improvements are amortized over the shorter of five years or the lease term. Intangible Assets Goodwill and indefinite-lived assets are not amortized, but are reviewed for impairment annually during the fourth quarter of each fiscal year and whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. Purchased technology and other intangible assets are presented at cost, net of accumulated amortization, and are amortized over their estimated useful lives of 1 to 15 years using the straight-line method. Long-Lived Assets Applied reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of these assets or asset group may not be recoverable. Applied assesses these assets for impairment based on estimated future cash flows from these assets. Research, Development and Engineering Costs Research, development and engineering costs are expensed as incurred. Sales and Value Added Taxes Taxes collected from customers and remitted to governmental authorities are presented on a net basis in the accompanying Consolidated Statements of Operations. Warranty Applied provides for the estimated cost of warranty when revenue is recognized. Estimated warranty costs are determined by analyzing specific product, current and historical configuration statistics and regional warranty support costs. Applied's warranty obligation is affected by product and component failure rates, material usage and labor costs incurred in correcting product failures during the warranty period. If actual warranty costs differ substantially from Applied's estimates, revisions to the estimated warranty liability would be required. Income Taxes Income tax expense is based on pretax earnings. Deferred tax assets and liabilities are recognized for the expected tax consequences of temporary differences between the book and tax bases of recorded assets and liabilities, net operating losses and tax credit carryforwards. Restructuring From time to time, Applied initiates restructuring activities to appropriately align its cost structure relative to prevailing economic and industry conditions and associated customer demand as well as in connection with certain acquisitions. Costs associated with restructuring actions can include termination benefits and related charges in addition to facility closure, contract termination and other related activities. Costs associated with restructuring activities are included in restructuring charges and asset impairments in the Consolidated Statements of Operations. Revenue Recognition Applied recognizes revenue when all four revenue recognition criteria have been met: persuasive evidence of an arrangement exists; delivery has occurred or services have been rendered; seller’s price to buyer is fixed or determinable; and collectability is probable. Applied’s shipping terms are customarily FOB Applied shipping point or equivalent terms. Applied’s revenue recognition policy generally results in revenue recognition at the following points: (1) for all transactions where legal title passes to the customer upon shipment or delivery, Applied recognizes revenue upon passage of title for all products that have been demonstrated to meet product specifications prior to shipment; the portion of revenue associated with certain installation-related tasks is deferred, and that revenue is recognized upon completion of the installation-related tasks; (2) for products that have not been demonstrated to meet product specifications prior to shipment, revenue is recognized at customer technical acceptance; (3) for transactions where legal title does not pass at shipment or delivery, revenue is recognized when legal title passes to the customer, which is generally at customer technical acceptance; and (4) for arrangements containing multiple elements, the revenue relating to the undelivered elements is deferred using the relative selling price method utilizing estimated sales prices until delivery of the deferred elements. Applied limits the amount of revenue recognition for delivered elements to the amount that is not contingent on the future delivery of products or services, future performance obligations or subject to customer-specified return or adjustment. In cases where Applied has sold products that have been demonstrated to meet product specifications prior to shipment, Applied believes that at the time of delivery, it has an enforceable claim to amounts recognized as revenue. Spare parts revenue is generally recognized upon shipment, and services revenue is generally recognized over the period that the services are provided. When a sales arrangement contains multiple elements, such as hardware and services and/or software products, Applied allocates revenue to each element based on a selling price hierarchy. The selling price for a deliverable is based on its vendor specific objective evidence (VSOE) if available, third party evidence (TPE) if VSOE is not available, or estimated selling price (ESP) if neither VSOE nor TPE is available. Applied generally utilizes the ESP due to the nature of its products. In multiple element arrangements where more-than-incidental software deliverables are included, revenue is allocated to each separate unit of accounting for each of the non-software deliverables and to the software deliverables as a group using the relative selling prices of each of the deliverables in the arrangement based on the aforementioned selling price hierarchy. If the arrangement contains more than one software deliverable, the arrangement consideration allocated to the software deliverables as a group is then allocated to each software deliverable using the guidance for recognizing software revenue. Derivative Financial Instruments Applied uses financial instruments, such as forward exchange and currency option contracts, to hedge a portion of, but not all, existing and anticipated foreign currency denominated transactions typically expected to occur within 24 months. The purpose of Applied’s foreign currency management is to mitigate the effect of exchange rate fluctuations on certain foreign currency denominated revenues, costs and eventual cash flows. The terms of derivative financial instruments used for hedging purposes are generally consistent with the timing of the transactions being hedged. All of Applied’s derivative financial instruments are recorded at fair value based upon quoted market prices for comparable instruments. For derivative instruments designated and qualifying as cash flow hedges, the effective portion of the gain or loss on these hedges is reported as a component of accumulated other comprehensive income (loss) in stockholders’ equity, and is reclassified into earnings when the hedged transaction affects earnings. If the transaction being hedged fails to occur, or if a portion of any derivative is ineffective, the gain or loss on the associated financial instrument is recorded promptly in earnings. For derivative instruments used to hedge existing foreign currency denominated assets or liabilities, the gain or loss on these hedges is recorded promptly in earnings to offset the changes in the fair value of the assets or liabilities being hedged. Applied does not use derivative financial instruments for trading or speculative purposes. Foreign Currencies As of October 25, 2015 , all of Applied’s subsidiaries use the United States dollar as their functional currency. Accordingly, assets and liabilities of these subsidiaries are remeasured using exchange rates in effect at the end of the period, except for non-monetary assets, such as inventories and property, plant and equipment, which are remeasured using historical exchange rates. Foreign currency-denominated revenues and costs are remeasured using average exchange rates for the period, except for costs related to those balance sheet items that are remeasured using historical exchange rates. The resulting remeasurement gains and losses are included in general and administrative expenses in the Consolidated Statements of Operations as incurred. Concentrations of Credit Risk Financial instruments that potentially subject Applied to significant concentrations of credit risk consist principally of cash equivalents, investments, trade accounts receivable and derivative financial instruments used in hedging activities. Applied invests in a variety of financial instruments, such as, but not limited to, certificates of deposit, corporate and municipal bonds, United States Treasury and agency securities, and asset-backed and mortgage-backed securities, and, by policy, limits the amount of credit exposure with any one financial institution or commercial issuer. Applied performs ongoing credit evaluations of its customers’ financial condition and generally requires no collateral to secure accounts receivable. Applied maintains an allowance reserve for potentially uncollectible accounts receivable based on its assessment of the collectability of accounts receivable. Applied regularly reviews the allowance by considering factors such as historical experience, credit quality, age of the accounts receivable balances, and current economic conditions that may affect a customer’s ability to pay. In addition, Applied utilizes letters of credit to mitigate credit risk when considered appropriate. Applied is exposed to credit-related losses in the event of nonperformance by counterparties to derivative financial instruments, but does not expect any counterparties to fail to meet their obligations. In some instances, Applied has entered into security arrangements which require the counterparties to post collateral to further mitigate credit exposure. Recent Accounting Pronouncements In July 2015, the Financial Accounting Standards Board (FASB) issued authoritative guidance that requires inventory to be measured at the lower of cost and net realizable value instead of at lower of cost or market. This guidance does not apply to inventory that is measured using last-in, first out (LIFO) or the retail inventory method but applies to all other inventory including those measured using first-in, first-out (FIFO) or the average cost method. The authoritative guidance will be effective for Applied in the first quarter of fiscal 2018 and should be applied prospectively. Early adoption is permitted as of the beginning of an interim or annual reporting period. Applied is currently evaluating the effect of this new guidance on Applied's consolidated financial statements. In May 2015, the FASB issued authoritative guidance to remove the requirement to categorize within the fair value hierarchy all investments for which fair value is measured using the net asset value per share practical expedient. The new guidance also removes the requirement of certain disclosures for all investments that are eligible to be measured at fair value using the net asset value per share practical expedient. The guidance becomes effective retrospectively for Applied in the first quarter of fiscal 2017. Early adoption is permitted. The adoption of this guidance will only impact disclosures in Applied's financial statements. In April 2015, the FASB issued authoritative guidance for customers about whether a cloud computing arrangement includes a software license. If a cloud computing arrangement includes a software license, then the customer should account for the software license element of the arrangement consistent with the acquisition of other software licenses. If a cloud computing arrangement does not include a software license, the customer should account for the arrangement as a service contract. This guidance will not change accounting for service contracts. The guidance becomes effective for Applied in the first quarter of fiscal 2017 and may be adopted either (1) prospectively to all arrangements entered into or materially modified after the effective date or (2) retrospectively. Early adoption is permitted. Applied is currently evaluating the effect of this new guidance on Applied's financial position, results of operations and its ongoing financial reporting, including the selection of a transition method. In April 2015, the FASB issued authoritative guidance that requires debt issuance costs to be presented in the balance sheet as a direct deduction from the carrying amount of the related debt liability, consistent with debt discounts. The authoritative guidance is effective for Applied in the first quarter of fiscal 2017 and should be applied retrospectively. Early adoption is permitted. The adoption of this guidance is not expected to have a significant impact on Applied's consolidated financial statements. In May 2014, the FASB issued authoritative guidance that requires revenue recognition to depict the transfer of promised goods or services to a customer in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This new standard will supersede most current revenue recognition guidance, including industry-specific guidance. Entities will have the option of using either a full retrospective or modified retrospective approach to adopting the guidance. Under the modified approach, an entity would recognize the cumulative effect of initially applying the guidance with an adjustment to the opening balance of retained earnings in the period of adoption. In addition, the modified approach will require additional disclosures. In August 2015, the FASB issued an amendment to defer the effective date by one year and allow entities to early adopt no earlier than the original effective date. With this amendment, the guidance will be effective for Applied in the first quarter of fiscal 2019. Applied is currently evaluating the effect of this new guidance on Applied's financial position, results of operations and its ongoing financial reporting, including the selection of a transition method. In April 2014, the FASB issued authoritative guidance that raises the threshold for a disposal transaction to qualify as a discontinued operation and requires additional disclosures about discontinued operations and disposals of individually significant components that do not qualify as discontinued operations. The authoritative guidance becomes effective prospectively for Applied in the first quarter of fiscal 2016. Early adoption is permitted, but only for disposals that have not been reported in financial statements previously issued. |
Earnings Per Share
Earnings Per Share | 12 Months Ended |
Oct. 25, 2015 | |
Earnings Per Share [Abstract] | |
Earnings Per Share | Earnings Per Share Basic earnings per share is determined using the weighted average number of common shares outstanding during the period. Diluted earnings per share is determined using the weighted average number of common shares and potential common shares (representing the dilutive effect of stock options, restricted stock units, and employee stock purchase plan shares) outstanding during the period. Applied’s net income has not been adjusted for any period presented for purposes of computing basic or diluted earnings per share due to the Company’s non-complex capital structure. Fiscal Year 2015 2014 2013 (In millions, except per share amounts) Numerator: Net income $ 1,377 $ 1,072 $ 256 Denominator: Weighted average common shares outstanding 1,214 1,215 1,202 Effect of dilutive stock options, restricted stock units and employee stock purchase plan shares 12 16 17 Denominator for diluted earnings per share 1,226 1,231 1,219 Basic earnings per share $ 1.13 $ 0.88 $ 0.21 Diluted earnings per share $ 1.12 $ 0.87 $ 0.21 Potentially dilutive securities — 1 2 Potentially dilutive securities attributable to outstanding stock options and restricted stock units were excluded from the calculation of diluted earnings per share because the combined exercise price, average unamortized fair value and assumed tax benefits upon the exercise of options and the vesting of restricted stock units were greater than the average market price of Applied common stock, and therefore their inclusion would have been anti-dilutive. |
Cash, Cash Equivalents and Inve
Cash, Cash Equivalents and Investments | 12 Months Ended |
Oct. 25, 2015 | |
Cash and Cash Equivalents [Abstract] | |
Cash, Cash Equivalents and Investments | Cash, Cash Equivalents and Investments Summary of Cash, Cash Equivalents and Investments The following tables summarize Applied’s cash, cash equivalents and investments by security type: October 25, 2015 Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value (In millions) Cash $ 1,010 $ — $ — $ 1,010 Cash equivalents: Money market funds 3,272 — — 3,272 Non-U.S. government securities* 60 — — 60 Municipal securities 73 — — 73 Commercial paper, corporate bonds and medium-term notes 382 — — 382 Total Cash equivalents 3,787 — — 3,787 Total Cash and Cash equivalents $ 4,797 $ — $ — $ 4,797 Short-term and long-term investments: U.S. Treasury and agency securities $ 84 $ — $ — $ 84 Non-U.S. government securities* 9 — — 9 Municipal securities 384 2 — 386 Commercial paper, corporate bonds and medium-term notes 250 — — 250 Asset-backed and mortgage-backed securities 262 — — 262 Total fixed income securities 989 2 — 991 Publicly traded equity securities 28 17 — 45 Equity investments in privately-held companies 78 — — 78 Total short-term and long-term investments $ 1,095 $ 19 $ — $ 1,114 Total Cash, Cash equivalents and Investments $ 5,892 $ 19 $ — $ 5,911 _________________________ * Includes agency debt securities guaranteed by non-U.S. governments, which consist of Canada and Germany. October 26, 2014 Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value (In millions) Cash $ 508 $ — $ — $ 508 Cash equivalents: Money market funds 2,494 — — 2,494 Total Cash equivalents 2,494 — — 2,494 Total Cash and Cash equivalents $ 3,002 $ — $ — $ 3,002 Short-term and long-term investments: U.S. Treasury and agency securities $ 62 $ — $ — $ 62 Non-U.S. government securities* 14 — — 14 Municipal securities 391 2 — 393 Commercial paper, corporate bonds and medium-term notes 223 1 — 224 Asset-backed and mortgage-backed securities 287 1 2 286 Total fixed income securities 977 4 2 979 Publicly traded equity securities 19 31 — 50 Equity investments in privately-held companies 66 — — 66 Total short-term and long-term investments $ 1,062 $ 35 $ 2 $ 1,095 Total Cash, Cash equivalents and Investments $ 4,064 $ 35 $ 2 $ 4,097 _________________________ * Includes agency debt securities guaranteed by non-U.S. governments, which consist of Canada and Germany. Maturities of Investments The following table summarizes the contractual maturities of Applied’s investments at October 25, 2015 : Cost Estimated Fair Value (In millions) Due in one year or less $ 155 $ 156 Due after one through five years 572 573 No single maturity date** 368 385 $ 1,095 $ 1,114 _________________________ ** Securities with no single maturity date include publicly-traded and privately-held equity securities, and asset-backed and mortgage-backed securities. Gains and Losses on Investments Gross realized gains and losses on sales of investments for each fiscal year were as follows: 2015 2014 2013 (In millions) Gross realized gains $ 9 $ 27 $ 7 Gross realized losses $ 3 $ 2 $ 2 At October 25, 2015 , gross unrealized losses related to Applied's investment portfolio were not material. Applied regularly reviews its investment portfolio to identify and evaluate investments that have indications of possible impairment. Factors considered in determining whether an unrealized loss is considered to be temporary, or other-than-temporary and therefore impaired, include: the length of time and extent to which fair value has been lower than the cost basis; the financial condition, credit quality and near-term prospects of the investee; and whether it is more likely than not that Applied will be required to sell the security prior to recovery. Generally, the contractual terms of investments in marketable securities do not permit settlement at prices less than the amortized cost of the investments. Applied determined that the gross unrealized losses on its marketable securities at October 25, 2015 , October 26, 2014 and October 27, 2013 were temporary in nature and therefore it did not recognize any impairment of its marketable securities for fiscal 2015 , 2014 or 2013 . During fiscal 2015 , 2014 and 2013 , Applied determined that certain of its equity investments in privately-held companies were other-than-temporarily impaired and, accordingly, recognized impairment charges of $9 million , $15 million and $6 million , respectively. These impairment charges are included in interest and other income, net in the Consolidated Statement of Operations. Unrealized gains and temporary losses on investments classified as available-for-sale are included within accumulated other comprehensive income (loss), net of any related tax effect. Upon realization, those amounts are reclassified from accumulated other comprehensive income (loss) to results of operations. |
Fair Value Measurements
Fair Value Measurements | 12 Months Ended |
Oct. 25, 2015 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements Applied’s financial assets are measured and recorded at fair value, except for equity investments in privately-held companies. These equity investments are generally accounted for under the cost method of accounting and are periodically assessed for other-than-temporary impairment when events or circumstances indicate that an other-than-temporary decline in value may have occurred. Applied’s nonfinancial assets, such as goodwill, intangible assets, and property, plant and equipment, are recorded at cost and are assessed for impairment when events or circumstances indicate that an other-than-temporary decline in value may have occurred. Fair Value Hierarchy Applied uses the following fair value hierarchy, which prioritizes the inputs to valuation techniques used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement: • Level 1 — Quoted prices in active markets for identical assets or liabilities; • Level 2 — Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and • Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Applied’s investments consist primarily of debt securities that are classified as available-for-sale and recorded at their fair values. In determining the fair value of investments, Applied uses pricing information from pricing services that value securities based on quoted market prices and models that utilize observable market inputs. In the event a fair value estimate is unavailable from a pricing service, Applied generally obtains non-binding price quotes from brokers. Applied then reviews the information provided by the pricing services or brokers to determine the fair value of its short-term and long-term investments. In addition, to validate pricing information obtained from pricing services, Applied periodically performs supplemental analysis on a sample of securities. Applied reviews any significant unanticipated differences identified through this analysis to determine the appropriate fair value. Investments with remaining effective maturities of 12 months or less from the balance sheet date are classified as short-term investments. Investments with remaining effective maturities of more than 12 months from the balance sheet date are classified as long-term investments. As of October 25, 2015 , substantially all of Applied’s available-for-sale, short-term and long-term investments were recognized at fair value that was determined based upon observable inputs. Assets Measured at Fair Value on a Recurring Basis Financial assets (excluding cash balances) measured at fair value on a recurring basis are summarized below: October 25, 2015 October 26, 2014 Level 1 Level 2 Total Level 1 Level 2 Total (In millions) Assets: Money market funds $ 3,272 $ — $ 3,272 $ 2,494 $ — $ 2,494 U.S. Treasury and agency securities 72 12 84 43 19 62 Non-U.S. government securities — 69 69 — 14 14 Municipal securities — 459 459 — 393 393 Commercial paper, corporate bonds and medium-term notes — 632 632 — 224 224 Asset-backed and mortgage-backed securities — 262 262 — 286 286 Publicly traded equity securities 45 — 45 50 — 50 Foreign exchange derivative assets — 2 2 — 52 52 Total $ 3,389 $ 1,436 $ 4,825 $ 2,587 $ 988 $ 3,575 There were no transfers between Level 1 and Level 2 fair value measurements during fiscal 2015 and 2014 , and Applied did not have any financial assets measured at fair value on a recurring basis within Level 3 fair value measurements as of October 25, 2015 or October 26, 2014 . Assets and Liabilities Measured at Fair Value on a Non-recurring Basis Equity investments in privately-held companies are generally accounted for under the cost method of accounting and are periodically assessed for other-than-temporary impairment when an event or circumstance indicates that an other-than-temporary decline in value may have occurred. If Applied determines that an other-than-temporary impairment has occurred, the investment will be written down to its estimated fair value based on available information, such as pricing in recent rounds of financing, current cash positions, earnings and cash flow forecasts, recent operational performance and any other readily available market data. Equity investments in privately-held companies totaled $78 million at October 25, 2015 , of which $70 million of investments were accounted for under the cost method of accounting and $8 million of investments had been measured at fair value on a non-recurring basis within Level 3 fair value measurements due to an other-than-temporary decline in value. Equity investments in privately-held companies totaled $66 million at October 26, 2014 , of which $57 million of investments were accounted for under the cost method of accounting and $9 million of investments had been measured at fair value on a non-recurring basis within Level 3 fair value measurements due to an other-than-temporary decline in value. During fiscal 2015 , 2014 and 2013 , Applied determined that certain of its equity investments held in privately-held companies were other-than-temporarily impaired and, accordingly, recognized impairment charges of $9 million , $15 million and $6 million , respectively. In fiscal 2013 , Applied recorded goodwill and intangible asset impairment charges related to the Energy and Environmental Solutions segment. The inputs used to measure the fair value of goodwill and intangible assets of the Energy and Environmental Solutions segment are classified as a Level 3 fair value measurement due to the significance of unobservable inputs using company-specific information. The valuation methodology used to estimate the fair value of goodwill and intangible assets is discussed in Note 9, Goodwill, Purchased Technology and Other Intangible Assets. Other The carrying amounts of Applied’s financial instruments, including cash and cash equivalents, accounts receivable, notes payable - short term, and accounts payable and accrued expenses, approximate fair value due to their short maturities. At October 25, 2015 , the carrying amount of long-term debt was $3.3 billion , and the estimated fair value was $3.5 billion . At October 26, 2014 , the carrying amount of long-term debt was $1.9 billion , and the estimated fair value was $2.2 billion . The estimated fair value of long-term debt is determined by Level 2 inputs and is based primarily on quoted market prices for the same or similar issues. |
Derivative Instruments and Hedg
Derivative Instruments and Hedging Activities | 12 Months Ended |
Oct. 25, 2015 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Instruments and Hedging Activities | Derivative Instruments and Hedging Activities Derivative Financial Instruments Applied conducts business in a number of foreign countries, with certain transactions denominated in local currencies, such as the Japanese yen, euro, Israeli shekel and Taiwanese dollar. Applied uses derivative financial instruments, such as forward exchange contracts and currency option contracts, to hedge certain forecasted foreign currency denominated transactions expected to occur typically within the next 24 months . The purpose of Applied’s foreign currency management is to mitigate the effect of exchange rate fluctuations on certain foreign currency denominated revenues, costs and eventual cash flows. The terms of currency instruments used for hedging purposes are generally consistent with the timing of the transactions being hedged. During fiscal 2015, Applied entered into and settled a series of forward-starting interest rate swap agreements, with a total notional amount of $600 million , to hedge against the variability of cash flows due to changes in the benchmark interest rate of fixed rate debt. These instruments were designated as cash flow hedges at inception and settled in conjunction with the issuance of debt in the fourth quarter of fiscal 2015. The loss from the settlement of the interest rate swap agreement was $20 million , which was included in accumulated other comprehensive income (AOCI) in stockholders' equity and will be amortized to interest expense over the term of the senior unsecured 10 -year notes issued in September 2015. Applied does not use derivative financial instruments for trading or speculative purposes. Derivative instruments and hedging activities, including foreign currency exchange contracts and interest rate swap agreements, are recognized on the balance sheet at fair value. Changes in the fair value of derivatives that do not qualify for hedge treatment, as well as the ineffective portion of any hedges, are recognized currently in earnings. All of Applied’s derivative financial instruments are recorded at their fair value in other current assets or in accounts payable and accrued expenses. Hedges related to anticipated transactions are designated and documented at the inception of the hedge as cash flow hedges and foreign exchange derivatives are typically entered into once per month. Cash flow hedges are evaluated for effectiveness quarterly. The effective portion of the gain or loss on these hedges is reported as a component of AOCI in stockholders’ equity and is reclassified into earnings when the hedged transaction affects earnings. The majority of the after-tax net income or loss related to foreign exchange derivative instruments included in AOCI at October 25, 2015 is expected to be reclassified into earnings within 12 months . Changes in the fair value of currency forward exchange and option contracts due to changes in time value are excluded from the assessment of effectiveness. Both ineffective hedge amounts and hedge components excluded from the assessment of effectiveness are recognized in earnings. If the transaction being hedged is no longer probable to occur, or if a portion of any derivative is deemed to be ineffective, Applied promptly recognizes the gain or loss on the associated financial instrument in earnings. The amount recognized due to discontinuance of cash flow hedges that were probable not to occur by the end of the originally specified time period was not significant for fiscal 2015 , 2014 or 2013 . Additionally, forward exchange contracts are generally used to hedge certain foreign currency denominated assets or liabilities. These derivatives are typically entered into once per month and are not designated for hedge accounting treatment. Accordingly, changes in the fair value of these hedges are recorded in earnings to offset the changes in the fair value of the assets or liabilities being hedged. Following the announcement of the proposed business combination with Tokyo Electron Limited (TEL) in September 2013, Applied purchased foreign exchange option contracts to limit its foreign exchange risk associated with the proposed business combination. The derivatives used to hedge currency exposure did not qualify for hedge accounting treatment. These derivatives were marked to market at the end of each reporting period with gains and losses recorded as part of operating expenses. During fiscal 2014, the derivatives purchased in fiscal 2013 were sold, and the Company recorded gains of $42 million . Concurrently, during the fourth quarter of fiscal 2014, the Company purchased new foreign exchange option contracts for the same purpose with an extended maturity. At October 26, 2014, the fair value of these foreign exchange option contracts was approximately $ 52 million and Applied recognized an unrealized loss of $12 million during fiscal 2014 related to these contracts. Due to the termination of the proposed business combination with TEL on April 26, 2015, these foreign exchange option contracts were sold during the third quarter of fiscal 2015. Applied recorded a gain of $89 million in fiscal 2015 related to these contracts. The cash flow impacts of these derivatives have been classified as operating cash flows in the Consolidated Statements of Cash Flows. To further mitigate credit exposure in connection with these foreign exchange option contracts, the Company entered into security arrangements with certain counterparties, which require the counterparties to post collateral amounting to the approximate fair value of the derivative contracts. The cash collateral was included in cash and cash equivalents in the Consolidated Balance Sheets, with the corresponding liability included in accounts payable and accrued expenses as of October 26, 2014. The requirement to provide cash collateral was canceled following the settlement of the foreign exchange option contracts during fiscal 2015. Other than the foreign exchange option contracts discussed in the preceding paragraph, the fair values of other foreign exchange derivative instruments at October 25, 2015 and October 26, 2014 were not material. The effects of derivative instruments on the Consolidated Statements of Operations for each fiscal year were as follows: Effective Portion Ineffective Portion and Amount Derivatives in Cash Flow Hedging Relationships Location of Gain or Gain or Gain or (Loss) Gain or (Loss) (In millions) 2015 Foreign exchange contracts Cost of products sold $ 6 $ 15 $ (4 ) Foreign exchange contracts General and administrative — (6 ) (2 ) Interest rate swaps Interest expense (20 ) — — Total $ (14 ) $ 9 $ (6 ) 2014 Foreign exchange contracts Cost of products sold $ 7 $ 8 $ (2 ) Foreign exchange contracts General and administrative — 1 (2 ) Total $ 7 $ 9 $ (4 ) 2013 Foreign exchange contracts Cost of products sold $ 29 $ 21 $ (3 ) Foreign exchange contracts General and administrative — 7 (1 ) Total $ 29 $ 28 $ (4 ) Amount of Gain or (Loss) Recognized in Income Derivatives Not Designated as Hedging Instruments Location of Gain or 2015 2014 2013 (In millions) Foreign exchange contracts Gain (loss) on derivatives associated with terminated business combination $ 89 $ 30 $ (7 ) Foreign exchange contracts General and administrative 21 19 26 Total $ 110 $ 49 $ 19 Credit Risk Contingent Features If Applied’s credit rating were to fall below investment grade, it would be in violation of credit risk contingent provisions of the derivative instruments discussed above, and certain counterparties to the derivative instruments could request immediate payment on derivative instruments in net liability positions. The aggregate fair value of all derivative instruments with credit-risk related contingent features that were in a net liability position was immaterial as of October 25, 2015 and October 26, 2014 . Entering into derivative contracts with banks exposes Applied to credit-related losses in the event of the banks’ nonperformance. However, Applied’s exposure is not considered significant. |
Accounts Receivable, Net
Accounts Receivable, Net | 12 Months Ended |
Oct. 25, 2015 | |
Receivables [Abstract] | |
Accounts Receivable, Net | Accounts Receivable, Net Applied has agreements with various financial institutions to sell accounts receivable and discount promissory notes from selected customers. Applied sells its accounts receivable without recourse. Applied, from time to time, also discounts letters of credit issued by customers through various financial institutions. The discounting of letters of credit depends on many factors, including the willingness of financial institutions to discount the letters of credit and the cost of such arrangements. Applied did not factor any accounts receivable or discount promissory notes during fiscal 2015 or 2013 . Applied factored accounts receivable of $ 45 million and discounted $29 million of letters of credit issued by customers during fiscal 2014 . Financing charges on the sale of receivables and discounting of letters of credit are included in interest expense in the accompanying Consolidated Statements of Operations and were not material for all years presented. Accounts receivable are presented net of allowance for doubtful accounts of $49 million and $58 million at October 25, 2015 and October 26, 2014 , respectively. Changes in allowance for doubtful accounts for each fiscal year were as follows: 2015 2014 2013 (In millions) Beginning balance $ 58 $ 74 $ 87 Provision — — — Deductions 1 (9 ) (16 ) (13 ) Ending balance $ 49 $ 58 $ 74 _____________________________ 1 Fiscal 2015, 2014 and 2013 deductions represent releases of allowance for doubtful accounts credited to expense as a result of an overall lower risk profile of Applied's customers. Applied sells its products principally to manufacturers within the semiconductor, display and solar industries. While Applied believes that its allowance for doubtful accounts is adequate and represents its best estimate as of October 25, 2015 , it continues to closely monitor customer liquidity and industry and economic conditions, which may result in changes to Applied’s estimates regarding collectability. |
Balance Sheet Detail
Balance Sheet Detail | 12 Months Ended |
Oct. 25, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Balance Sheet Detail | Balance Sheet Detail October 25, October 26, (In millions) Inventories Customer service spares $ 382 $ 316 Raw materials 438 405 Work-in-process 294 316 Finished goods 719 530 $ 1,833 $ 1,567 Included in finished goods inventory is $155 million and $104 million at October 25, 2015 and October 26, 2014 , respectively, of newly-introduced systems at customer locations where the sales transaction did not meet Applied’s revenue recognition criteria as set forth in Note 1. Finished goods inventory includes $185 million and $164 million of evaluation inventory at October 25, 2015 and October 26, 2014 , respectively. October 25, October 26, (In millions) Other Current Assets Deferred income taxes, net $ 403 $ 232 Prepaid income taxes and income taxes receivable 127 79 Prepaid expenses and other 194 257 $ 724 $ 568 Useful Life October 25, October 26, (In years) (In millions) Property, Plant and Equipment, Net Land and improvements $ 157 $ 156 Buildings and improvements 3-30 1,247 1,227 Demonstration and manufacturing equipment 3-5 920 829 Furniture, fixtures and other equipment 3-15 574 575 Construction in progress 48 61 Gross property, plant and equipment 2,946 2,848 Accumulated depreciation (2,054 ) (1,987 ) $ 892 $ 861 Depreciation expense was $185 million , $191 million and $211 million for fiscal 2015 , 2014 and 2013 respectively. During fiscal 2015 and 2013, fixed asset impairment charges of $4 million and $12 million , respectively were recorded in relation to the Energy and Environmental Solutions segment restructuring activities, as discussed in Note 11, Restructuring Charges and Asset Impairments. There was no fixed asset impairment charge recorded during fiscal 2014. October 25, October 26, (In millions) Accounts Payable and Accrued Expenses Accounts payable $ 658 $ 613 Compensation and employee benefits 509 524 Warranty 126 113 Income taxes payable 60 142 Dividends payable 116 122 Other accrued taxes 58 51 Interest payable 36 30 Other 270 288 $ 1,833 $ 1,883 October 25, October 26, (In millions) Customer Deposits and Deferred Revenue Customer deposits $ 132 $ 286 Deferred revenue 633 654 $ 765 $ 940 Applied typically receives deposits on future deliverables from customers in the Energy and Environmental Solutions and Display segments. In certain instances, customer deposits may be received from customers in the Applied Global Services segment. October 25, October 26, (In millions) Other Liabilities Deferred income taxes $ 56 $ 32 Income taxes payable 227 225 Defined and postretirement benefit plans 187 208 Other 85 71 $ 555 $ 536 |
Business Combinations
Business Combinations | 12 Months Ended |
Oct. 25, 2015 | |
Business Combinations [Abstract] | |
Business Combinations | Business Combinations Tokyo Electron Limited On September 24, 2013, Applied and Tokyo Electron Limited (TEL) entered into a Business Combination Agreement, which was intended to effect a strategic combination of their respective businesses into a new combined company, and was subject to regulatory approvals. On April 26, 2015, Applied and TEL announced that they had mutually agreed to terminate the Business Combination Agreement. No termination fee was payable by either Applied or TEL. Other From time to time, Applied makes acquisitions of or investments in companies related to existing or new markets for Applied. Applied completed acquisitions during fiscal 2015 and 2014, which were not significant to Applied's consolidated results of operations and financial position. Substantially all of the consideration was allocated to acquisition-related intangible assets. See Note 9 Goodwill, Purchased Technology and Other Intangible Assets for more information. |
Goodwill, Purchased Technology
Goodwill, Purchased Technology and Other Intangible Assets | 12 Months Ended |
Oct. 25, 2015 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill, Purchased Technology and Other Intangible Assets | Goodwill, Purchased Technology and Other Intangible Assets Goodwill and Purchased Intangible Assets Applied’s methodology for allocating the purchase price relating to purchase acquisitions is determined through established and generally accepted valuation techniques. Goodwill is measured as the excess of the purchase price over the sum of the amounts assigned to tangible and identifiable intangible assets acquired less liabilities assumed. Applied assigns assets acquired (including goodwill) and liabilities assumed to one or more reporting units as of the date of acquisition. Typically, acquisitions relate to a single reporting unit and thus do not require the allocation of goodwill to multiple reporting units. If the products obtained in an acquisition are assigned to multiple reporting units, the goodwill is distributed to the respective reporting units as part of the purchase price allocation process. Goodwill and purchased intangible assets with indefinite useful lives are not amortized, but are reviewed for impairment annually during the fourth quarter of each fiscal year and whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. The process of evaluating the potential impairment of goodwill and intangible assets requires significant judgment, especially in emerging markets. Applied regularly monitors current business conditions and considers other factors including, but not limited to, adverse industry or economic trends, restructuring actions and lower projections of profitability that may impact future operating results. To test goodwill for impairment, Applied first performs a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value. If it is concluded that this is the case, Applied then performs the two-step goodwill impairment test. Otherwise, the two-step goodwill impairment test is not required. Under the two-step goodwill impairment test, Applied would, in the first step, compare the estimated fair value of each reporting unit to its carrying value. Applied determines the fair value of each of its reporting units based on a weighting of income and market approaches. If the carrying value of a reporting unit exceeds its fair value, Applied would then perform the second step of the impairment test in order to determine the implied fair value of the reporting unit’s goodwill. If Applied determines that the carrying value of a reporting unit’s goodwill exceeds its implied fair value, Applied would record an impairment charge equal to the difference. During the third quarter of fiscal 2015, Applied implemented a new management structure, which resulted in changes in Applied’s reporting units. Applied determined its reporting units by first identifying its operating segments, and then assessing whether components of these operating segments constitute a business for which discrete financial information is available and where segment management regularly reviews the operating results of that component. Applied aggregates reporting units within an operating segment that have similar economic characteristics and are similar in nature of their products and services, production processes, type or class of customers, distribution methods and operational environment. As a result of the change in management structure, there were no changes in Applied’s reportable segments identified in Note 16, Industry Segment Operations. However, Applied identified three reporting units, which include the Transistor and Interconnect Group, Patterning and Packaging Group, and Imaging and Process Control Group, which combine to form the Silicon Systems reporting segment. The new management structure did not affect Applied Global Services, Display and Energy and Environmental Solutions. Based on these changes, Applied performed a goodwill impairment test for Silicon Systems immediately before the change in reporting units, allocated goodwill to each reporting unit in Silicon Systems based on the estimated fair value of each reporting unit and, then performed another goodwill impairment test for each of the new reporting units within the Silicon Systems segment. In performing the goodwill impairment test, Applied utilized both the discounted cash flow method (weighted 75% ) and the guideline company method (weighted 25% ) to estimate the fair value of the reporting units. The estimates used in the impairment testing were consistent with the discrete forecasts that Applied uses to manage its business, and considered any significant developments that occurred during the quarter. Under the discounted cash flow method, cash flows beyond the discrete forecasts were estimated using a terminal growth rate, which considered the long-term earnings growth rate specific to the reporting units. The estimated future cash flows were discounted to present value using each reporting unit's weighted average cost of capital. The weighted average cost of capital measures a reporting unit's cost of debt and equity financing weighted by the percentage of debt and equity in a reporting unit's target capital structure. In addition, the weighted average cost of capital was derived using both known and estimated market metrics, and was adjusted to reflect both the timing and risks associated with the estimated cash flows. The tax rate used in the discounted cash flow method was the median tax rate of comparable companies and reflected Applied's current international structure, which is consistent with the market participant perspective. Under the guideline company method, market multiples were applied to forecasted revenues and earnings before interest, taxes, depreciation and amortization. The market multiples used were consistent with comparable publicly-traded companies and considered each reporting unit's size, growth and profitability relative to its comparable companies. Based on Applied’s analysis, the estimated fair value exceeded the carrying value for Silicon Systems as a single reporting unit and for each new reporting unit subsequent to the change, and therefore, the second step of the goodwill impairment test was not required. In the fourth quarter of fiscal 2015 , Applied performed a qualitative assessment to test goodwill for all of its reporting units for impairment. Applied determined that it was more likely than not that each of its reporting units' fair values exceeded their respective carrying values and that it was not necessary to perform the two-step goodwill impairment test for any of its reporting units. Since fiscal 2012 , the solar industry has faced a deterioration in market conditions associated with manufacturing overcapacity and weak operating performance and outlook, resulting in uncertainties regarding the timing and nature of a recovery in solar capital equipment expenditures. In fiscal 2013, Applied performed a two-step goodwill impairment test and, as a result, recorded $224 million of goodwill impairment charges in the Energy and Environmental Solutions segment. Applied also recorded a $54 million impairment charge related to the intangible assets in the Energy and Environmental Solutions segment in the same year. As of 2015 , accumulated goodwill impairment charges from fiscal 2013 and prior periods amounted to $645 million , all of which were recorded in the Energy and Environmental Solutions segment. The evaluation of goodwill and intangible assets for impairment requires the exercise of significant judgment. In the event of future changes in business conditions, Applied will be required to reassess and update its forecasts and estimates used in future impairment analyses. If the results of these future analyses are lower than current estimates, a material impairment charge may result at that time. Details of goodwill and other indefinite-lived intangible assets were as follows: October 25, 2015 October 26, 2014 Goodwill Other Intangible Assets Total Goodwill Other Intangible Assets Total (In millions) Silicon Systems $ 2,151 $ — $ 2,151 $ 2,151 $ 103 $ 2,254 Applied Global Services 1,027 5 1,032 1,027 6 1,033 Display 124 18 142 126 18 144 Energy and Environmental Solutions — 2 2 — — — Carrying amount $ 3,302 $ 25 $ 3,327 $ 3,304 $ 127 $ 3,431 Other intangible assets that are not subject to amortization consist primarily of in-process technology, which will be subject to amortization upon commercialization. The fair value assigned to in-process technology was determined using the income approach taking into account estimates and judgments regarding risks inherent in the development process, including the likelihood of achieving technological success and market acceptance. If an in-process technology project is abandoned, the acquired technology attributable to the project will be written-off. During fiscal 2015 , goodwill and other indefinite lived intangible assets decreased by $104 million primarily due to commercialization of in-process technology in the Silicon Systems segment. A summary of Applied's purchased technology and intangible assets is set forth below: October 25, October 26, (In millions) Purchased technology, net $ 575 $ 636 Intangible assets - finite-lived, net 162 188 Intangible assets - indefinite-lived 25 127 Total $ 762 $ 951 Finite-Lived Purchased Intangible Assets Applied amortizes purchased intangible assets with finite lives using the straight-line method over the estimated economic lives of the assets, ranging from 1 to 15 years. Applied evaluates long-lived assets for impairment whenever events or changes in circumstances indicate the carrying value of an asset group may not be recoverable. Applied assesses the fair value of the assets based on the amount of the undiscounted future cash flow that the assets are expected to generate and recognizes an impairment loss when estimated undiscounted future cash flow expected to result from the use of the asset, plus net proceeds expected from disposition of the asset, if any, are less than the carrying value of the asset. When Applied identifies an impairment, Applied reduces the carrying value of the group of assets to comparable market values, when available and appropriate, or to its estimated fair value based on a discounted cash flow approach. Intangible assets, such as purchased technology, are generally recorded in connection with a business acquisition. The value assigned to intangible assets is usually based on estimates and judgments regarding expectations for the success and life cycle of products and technology acquired. Applied evaluates the useful lives of its intangible assets each reporting period to determine whether events and circumstances require revising the remaining period of amortization. In addition, Applied reviews intangible assets for impairment when events or changes in circumstances indicate their carrying value may not be recoverable. Management considers such indicators as significant differences in actual product acceptance from the estimates, changes in the competitive and economic environments, technological advances, and changes in cost structure. Details of finite-lived intangible assets were as follows: October 25, 2015 October 26, 2014 Purchased Technology Other Intangible Assets Total Purchased Technology Other Intangible Assets Total (In millions) Gross carrying amount: Silicon Systems $ 1,449 $ 252 $ 1,701 $ 1,346 $ 252 $ 1,598 Applied Global Services 28 44 72 28 44 72 Display 110 33 143 110 33 143 Energy and Environmental Solutions 4 12 16 5 17 22 Gross carrying amount $ 1,591 $ 341 $ 1,932 $ 1,489 $ 346 $ 1,835 Accumulated amortization: Silicon Systems $ (876 ) $ (95 ) $ (971 ) $ (716 ) $ (77 ) $ (793 ) Applied Global Services (26 ) (44 ) (70 ) (24 ) (44 ) (68 ) Display (110 ) (33 ) (143 ) (110 ) (31 ) (141 ) Energy and Environmental Solutions (4 ) (7 ) (11 ) (3 ) (6 ) (9 ) Accumulated amortization $ (1,016 ) $ (179 ) $ (1,195 ) $ (853 ) $ (158 ) $ (1,011 ) Carrying amount $ 575 $ 162 $ 737 $ 636 $ 188 $ 824 Details of amortization expense for each fiscal year by segment were as follows: 2015 2014 2013 (In millions) Silicon Systems $ 179 $ 173 $ 172 Applied Global Services 1 3 5 Display 2 2 6 Energy and Environmental Solutions 4 6 16 Total $ 186 $ 184 $ 199 Amortization expense for each fiscal year was charged to the following categories: 2015 2014 2013 (In millions) Cost of products sold $ 163 $ 159 $ 166 Research, development and engineering 1 1 1 Marketing and selling 20 21 26 General and administrative 2 3 6 Total $ 186 $ 184 $ 199 As of October 25, 2015 , future estimated amortization expense is expected to be as follows: Amortization Expense (In millions) 2016 189 2017 186 2018 185 2019 44 2020 39 Thereafter 94 Total $ 737 |
Borrowing Facilities and Debt
Borrowing Facilities and Debt | 12 Months Ended |
Oct. 25, 2015 | |
Debt Disclosure [Abstract] | |
Borrowing Facilities and Debt | Borrowing Facilities and Debt In September 2015, Applied entered into a $1.5 billion committed revolving credit agreement with a group of banks that is scheduled to expire in September 2020 . This credit agreement provides for borrowings in United States dollars at interest rates keyed to one of various benchmark rates selected by Applied for each advance, plus a margin based on Applied’s public debt rating and includes financial and other covenants. The September 2015 credit agreement replaces Applied's $1.5 billion credit agreement entered into in May 2011. In addition, Applied has credit facilities in the amount of approximately $67 million with Japanese banks. Applied’s ability to borrow under these facilities is subject to bank approval at the time of the borrowing request, and any advances will be at rates indexed to the banks’ prime reference rate denominated in Japanese yen. No amounts were outstanding under any of these facilities at October 25, 2015 and October 26, 2014 , and Applied has not utilized these credit facilities. In fiscal 2011, Applied established a short-term commercial paper program of up to $1.5 billion . At October 25, 2015 and October 26, 2014 , Applied did no t have any commercial paper outstanding. In September 2015, Applied issued senior unsecured notes in the aggregate principal amount of $1.8 billion and used a portion of the net proceeds to redeem $400 million in principal amount of its 2.650% senior notes due in 2016 at a redemption price of $ 405 million in November 2015. After adjusting for the carrying value of debt issuance costs and discounts, Applied recorded a $5 million loss on the prepayment of the $400 million debt, which will be included as a non-operating loss in the Consolidated Statement of Operations for the first quarter of fiscal 2016. In October 2015, a wholly-owned foreign subsidiary of Applied entered into a short-term loan agreement with multiple lenders, under which it borrowed $800 million to facilitate the return of capital to Applied. Debt outstanding as of October 25, 2015 and October 26, 2014 was as follows: Principal Amount October 25, October 26, Effective Interest Rate Interest Pay Dates (In millions) Short-term debt: 2.650% Senior Notes Due 2016 $ 400 $ — 2.666% June 15, December 15 Other debt 800 $ — 1.0% - 1.25% Total short-term debt 1,200 — Long-term debt: 2.650% Senior Notes Due 2016 — 400 2.666% June 15, December 15 7.125% Senior Notes Due 2017 200 200 7.190% April 15, October 15 2.625% Senior Notes Due 2020 600 — 2.640% April 1, October 1 4.300% Senior Notes Due 2021 750 750 4.326% June 15, December 15 3.900% Senior Notes Due 2025 700 — 3.944% April 1, October 1 5.100% Senior Notes Due 2035 500 — 5.127% April 1, October 1 5.850% Senior Notes Due 2041 600 600 5.879% June 15, December 15 3,350 1,950 Total unamortized discount (8 ) (3 ) Total long-term debt 3,342 1,947 Total debt $ 4,542 $ 1,947 |
Restructuring Charges and Asset
Restructuring Charges and Asset Impairments | 12 Months Ended |
Oct. 25, 2015 | |
Restructuring and Related Activities [Abstract] | |
Restructuring Charges and Asset Impairments | Restructuring Charges and Asset Impairments From time to time, Applied initiates restructuring activities to appropriately align its cost structure and product investments relative to prevailing market conditions, competitive environment and customer demand. Costs associated with restructuring actions can include termination benefits and related charges, in addition to facility closure, contract termination and other related activities. Restructuring charges and asset impairments are included in general and administrative expenses in the Consolidated Statements of Operations. The following table summarizes major components of the restructuring and asset impairment charges during each fiscal year: 2015 2014 2013 (In millions) 2012 Global Restructuring Plan Severance and other employee-related costs $ (1 ) $ 5 $ 39 2012 EES Restructuring Plan Severance and other employee-related costs — — 8 Contract cancellation and other costs (2 ) — 6 Asset impairments — — 12 Others Severance and other employee-related costs 9 — 2 Contract cancellation and other costs 1 — (4 ) Asset impairments 7 — — $ 14 $ 5 $ 63 Restructuring and asset impairment charges for each fiscal year were recorded as follows: 2015 2014 2013 (In millions) Silicon Systems $ — $ — $ 1 Applied Global Services — — 2 Energy and Environmental Solutions 15 — 25 Corporate Unallocated (1 ) 5 35 Total $ 14 $ 5 $ 63 2012 Global Restructuring Plan On October 3, 2012, Applied announced a restructuring plan (the 2012 Global Restructuring Plan) to realign its global workforce and enhance its ability to invest for growth. Under this plan, Applied implemented a voluntary retirement program and other workforce reduction actions. The voluntary retirement program was available to certain U.S. employees who met minimum age and length of service requirements, as well as other business-specific criteria. Applied implemented other workforce reduction actions globally across multiple business segments and functions, the extent of which depended on the number of employees who participated in the voluntary retirement program and other considerations. A total of approximately 1,300 positions were affected under this plan. As of January 26, 2014, principal activities related to this plan were complete. During fiscal 2014 and 2013 , Applied recognized $5 million and $39 million , respectively, of employee-related costs in connection with the 2012 Global Restructuring Plan. Total costs incurred in implementing this plan were $150 million , none of which were allocated to the operating segments. 2012 EES Restructuring Plan On May 10, 2012, Applied announced a plan (the 2012 EES Restructuring Plan) to restructure its Energy and Environmental Solutions segment in light of challenging industry conditions affecting the solar photovoltaic and light-emitting diode (LED) equipment markets. As part of this plan, Applied relocated certain manufacturing, business operations and customer support functions of its precision wafering systems business and ceased LED development activities. The 2012 EES Restructuring Plan also impacted certain LED support activities in the Applied Global Services segment. The 2012 EES Restructuring Plan impacted approximately 300 positions globally. As of October 27, 2013, principal activities related to this plan were complete. Total costs incurred in implementing this plan were $87 million , of which $13 million were inventory-related charges. During fiscal 2015, Applied recorded a favorable adjustment of $2 million associated with restructuring reserves under this program. During fiscal 2013 , Applied recognized $26 million , of restructuring and asset impairment charges in connection with the 2012 EES Restructuring Plan. These costs were reported in the Energy and Environmental Solutions and Applied Global Services segments. Other During fiscal 2015, Applied implemented cost reduction measures in its solar business to achieve a lower break-even level and improve business performance and incurred $ 17 million in restructuring charges and asset impairments and $ 35 million of inventory-related charges recorded in cost of products sold. These costs are reported in Applied Global Services and Energy and Environmental Solutions segments. Total costs expected to be incurred in implementing these actions are in the range of $ 45 million to $55 million . Applied expects to complete the principal activities related to these actions by the second quarter of fiscal 2016. As of October 25, 2015 , the restructuring accruals related to these actions were $4 million , of which $3 million is related to severance and other employee cost accruals. During fiscal 2013 , Applied also recognized $2 million of severance and other employee-related costs in connection with the integration of Varian. These costs were reported in the Silicon Systems and Applied Global Services segments. As of October 26, 2015, there were no remaining severance accrual associated with restructuring reserves under this program. Changes in restructuring reserves were as follows: 2012 Global Restructuring Plan 2012 EES Restructuring Plan Others Severance and Other Employee-Related Costs Severance and Other Employee-Related Costs Contract Cancellation and Other Costs Severance and Other Employee-Related Costs Contract Cancellation and Other Costs Total (In millions) Balance, October 28, 2012 $ 106 $ 16 $ 1 $ 5 $ 5 $ 133 Provision for restructuring reserves 35 7 8 2 — 52 Consumption of reserves (111 ) (18 ) (2 ) (5 ) — (136 ) Adjustment of restructuring reserves (4 ) — (2 ) — (4 ) (10 ) Balance, October 27, 2013 $ 26 $ 5 $ 5 $ 2 $ 1 $ 39 Provision for restructuring reserves 7 — — — — 7 Consumption of reserves (27 ) (5 ) (1 ) (2 ) — (35 ) Adjustment of restructuring reserves (2 ) — — — — (2 ) Balance, October 26, 2014 $ 4 $ — $ 4 $ — $ 1 $ 9 Provision for restructuring reserves — — — 8 1 9 Consumption of reserves (2 ) — (1 ) (5 ) (1 ) (9 ) Adjustment of restructuring reserves (1 ) — (2 ) — — (3 ) Balance, October 25, 2015 $ 1 $ — $ 1 $ 3 $ 1 $ 6 |
Stockholders' Equity, Comprehen
Stockholders' Equity, Comprehensive Income and Share-Based Compensation | 12 Months Ended |
Oct. 25, 2015 | |
Equity [Abstract] | |
Stockholders' Equity, Comprehensive Income and Share-Based Compensation | Stockholders’ Equity, Comprehensive Income and Share-Based Compensation Accumulated Other Comprehensive Income (Loss) Changes in the components of AOCI, net of tax, were as follows: Unrealized Gain (Loss) on Investments, Net Unrealized Gain (Loss) on Derivative Instruments Qualifying as Cash Flow Hedges Defined and Postretirement Benefit Plans Cumulative Translation Adjustments Total (In millions) Balance at October 27, 2013 $ 25 $ 2 $ (72 ) $ 7 $ (38 ) Other comprehensive income (loss) before reclassifications 8 4 (36 ) (2 ) (26 ) Amounts reclassified out of AOCI (9 ) (6 ) 3 — (12 ) Other comprehensive loss, net of tax (1 ) (2 ) (33 ) (2 ) (38 ) Balance at October 26, 2014 $ 24 $ — $ (105 ) $ 5 $ (76 ) Other comprehensive income (loss) before reclassifications (11 ) (9 ) (5 ) — (25 ) Amounts reclassified out of AOCI 1 (6 ) 5 9 9 Other comprehensive income (loss), net of tax (10 ) (15 ) — 9 (16 ) Balance at October 25, 2015 $ 14 $ (15 ) $ (105 ) $ 14 $ (92 ) Stock Repurchase Program On April 26, 2015, Applied's Board of Directors approved a common stock repurchase program authorizing up to $3.0 billion in repurchases over the three years ending April 2018. At October 25, 2015 , $1.7 billion remained available for future stock repurchases under this repurchase program. Applied's prior stock repurchase program ended in March 2015. The following table summarizes Applied’s stock repurchases for each fiscal year: 2015 2014 2013 (In millions, except per share amounts) Shares of common stock repurchased 76 — 18 Cost of stock repurchased $ 1,325 — $ 245 Average price paid per share $ 17.33 — $ 13.60 Applied records treasury stock purchases under the cost method using the first-in, first-out (FIFO) method. Upon reissuance of treasury stock, amounts in excess of the acquisition cost are credited to additional paid in capital. If Applied reissues treasury stock at an amount below its acquisition cost and additional paid in capital associated with prior treasury stock transactions is insufficient to cover the difference between the acquisition cost and the reissue price, this difference is recorded against retained earnings. Dividends During each of fiscal 2015 and 2014, Applied's Board of Directors declared four quarterly cash dividends of $0.10 per share. During fiscal 2013, Applied’s Board of Directors declared three quarterly cash dividends of $0.10 per share and one quarterly cash dividend of $0.09 per share. Dividends paid during fiscal 2015, 2014 and 2013 amounted to $487 million , $485 million and $456 million , respectively. Applied currently anticipates that cash dividends will continue to be paid on a quarterly basis, although the declaration of any future cash dividend is at the discretion of the Board of Directors and will depend on Applied’s financial condition, results of operations, capital requirements, business conditions and other factors, as well as a determination by the Board of Directors that cash dividends are in the best interests of Applied’s stockholders. Share-Based Compensation Applied has a stockholder-approved equity plan, the Employee Stock Incentive Plan, which permits grants to employees of share-based awards, including stock options, restricted stock, restricted stock units, performance shares and performance units. In addition, the plan provides for the automatic grant of restricted stock units to non-employee directors and permits the grant of share-based awards to non-employee directors and consultants. Share-based awards made beginning in March 2012 under the plan may be subject to accelerated vesting under certain circumstances in the event of a change in control of Applied. Applied also has two Employee Stock Purchase Plans, one generally for United States employees and a second generally for employees of international subsidiaries (collectively, ESPP), which enable eligible employees to purchase Applied common stock. Applied recognized total share-based compensation expense related to stock options, ESPP shares, restricted stock, restricted stock units, performance shares and performance units, and related tax benefits for each fiscal year as follows: 2015 2014 2013 (In millions) Share-based compensation $ 187 $ 177 $ 162 Tax benefit recognized $ 52 $ 50 $ 45 The effect of share-based compensation on the results of operations for each fiscal year was as follows: 2015 2014 2013 (In millions) Cost of products sold $ 57 $ 53 $ 50 Research, development, and engineering 69 66 53 Marketing and selling 26 23 20 General and administrative 35 35 34 Restructuring charge — — 5 Total $ 187 $ 177 $ 162 The cost associated with share-based awards that are subject solely to time-based vesting requirements, less expected forfeitures, is recognized over the awards’ service period for the entire award on a straight-line basis. The cost associated with performance-based equity awards is recognized for each tranche over the service period, based on an assessment of the likelihood that the applicable performance goals will be achieved. At October 25, 2015 , Applied had $262 million in total unrecognized compensation expense, net of estimated forfeitures, related to grants of share-based awards and shares issued under Applied’s ESPP, which will be recognized over a weighted average period of 2.4 years . At October 25, 2015 , there were 126 million shares available for grants of share-based awards under the Employee Stock Incentive Plan, and an additional 29 million shares available for issuance under the ESPP. Stock Options Applied grants options to purchase, at future dates, shares of its common stock to employees and consultants. The exercise price of each stock option equals the fair market value of Applied common stock on the date of grant. Options typically vest over three to four years, subject to the grantee’s continued service with Applied through the scheduled vesting date, and expire no later than seven years from the grant date. The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model. This model was developed for use in estimating the value of publicly traded options that have no vesting restrictions and are fully transferable. Applied’s employee stock options have characteristics significantly different from those of publicly traded options. There were no stock options granted during fiscal 2015 and 2014. The weighted average assumptions used in the model for the stock options granted and assumed are outlined below: 2013 Stock Options: Dividend yield 2.7 % Expected volatility 29.5 % Risk-free interest rate 1.44 % Expected life (in years) 4.5 Information with respect to stock options for each fiscal year is as follows: 2015 2014 2013 (In millions) Aggregate intrinsic value of outstanding stock options $ 6 $ 19 $ 49 Total intrinsic value of stock options exercised $ 6 $ 39 $ 63 Total fair value of stock options vested $ 1 $ 1 $ 4 Cash received from stock option exercises $ 3 $ 29 $ 88 Actual tax benefit realized from options exercised $ 2 $ 12 $ 19 Stock option activity during each fiscal year was as follows: 2015 2014 2013 Shares Weighted Average Exercise Price Shares Weighted Average Exercise Price Shares Weighted Average Exercise Price (In millions, except per share amounts) Outstanding, beginning of year 2 $ 10.87 6 $ 9.12 21 $ 10.53 Granted and assumed in Varian acquisition — $ — — $ — 1 $ 15.06 Exercised (1 ) $ 5.90 (4 ) $ 7.85 (11 ) $ 8.16 Canceled and forfeited — $ — — $ — (5 ) $ 17.62 Outstanding, end of year 1 $ 12.45 2 $ 10.87 6 $ 9.12 Exercisable, end of year 1 $ 10.98 1 $ 7.97 5 $ 7.90 The following table summarizes information with respect to options outstanding and exercisable at October 25, 2015 : Options Outstanding Options Exercisable Range of Exercise Prices Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Life Aggregate Intrinsic Value Number of Shares Weighted Average Exercise Price Aggregate Intrinsic Value (In millions) (In years) (In millions) (In millions) (In millions) $3.36 — $9.99 — $ 5.58 1.12 $ 4 — $ 5.58 $ 4 $10.00 — $15.06 1 $ 15.03 4.80 2 1 $ 15.00 1 1 $ 12.45 3.79 $ 6 1 $ 10.98 $ 5 Options exercisable and expected to become exercisable 1 $ 12.45 3.79 $ 6 Option prices at the lower end of the range were principally attributable to stock options assumed in connection with the Varian acquisition in fiscal 2012. Restricted Stock Units, Restricted Stock, Performance Shares and Performance Units Restricted stock units are converted into shares of Applied common stock upon vesting on a one -for-one basis. Restricted stock has the same rights as other issued and outstanding shares of Applied common stock except these shares generally have no right to dividends and are held in escrow until the award vests. Performance shares and performance units are awards that result in a payment to a grantee, generally in shares of Applied common stock on a one -for-one basis if performance goals and/or other vesting criteria established by the Human Resources and Compensation Committee of Applied's Board of Directors (the Committee) are achieved or the awards otherwise vest. Restricted stock units, restricted stock, performance shares and performance units typically vest over four years and vesting is usually subject to the grantee’s continued service with Applied and, in some cases, achievement of specified performance goals. The compensation expense related to the service-based awards is determined using the fair market value of Applied common stock on the date of the grant, and the compensation expense is recognized over the vesting period. Restricted stock, performance shares and performance units granted to certain executive officers are subject to the achievement of specified performance goals (performance-based awards). These performance-based awards become eligible to vest only if performance goals are achieved and then actually will vest only if the grantee remains employed by Applied through each applicable vesting date. These performance-based awards require the achievement of targeted levels of adjusted annual operating profit margin. For performance-based awards granted in fiscal 2015 and 2013, additional shares become eligible for time-based vesting if Applied achieves certain levels of total shareholder return (TSR) relative to a peer group, comprised of companies in the Standard & Poor's 500 Information Technology Index, measured at the end of a two-year period. The fair value of these performance-based awards is estimated on the date of grant and assumes that the specified performance goals will be achieved. If the goals are achieved, these awards vest over a specified remaining service period of generally three or four years, provided that the grantee remains employed by Applied through each scheduled vesting date. If the performance goals are not met as of the end of the performance period, no compensation expense is recognized and any previously recognized compensation expense is reversed. The expected cost of each award is reflected over the service period and is reduced for estimated forfeitures. A summary of the changes in restricted stock units, restricted stock, performance shares and performance units outstanding under Applied’s equity compensation plans is presented below: Shares Weighted Average Grant Date Fair Value Weighted Average Remaining Contractual Term Aggregate Intrinsic Value (In millions, except per share amounts) Non-vested restricted stock units, restricted stock, performance shares and performance units at October 28, 2012 36 $ 11.53 2.6 years $ 376 Granted 19 $ 10.55 Vested (11 ) $ 11.44 Canceled (6 ) $ 11.28 Non-vested restricted stock units, restricted stock, performance shares and performance units at October 27, 2013 38 $ 11.11 2.4 years $ 662 Granted 11 $ 16.58 Vested (13 ) $ 11.13 Canceled (3 ) $ 11.72 Non-vested restricted stock units, restricted stock, performance shares and performance units at October 26, 2014 33 $ 12.59 2.3 years $ 698 Granted 10 $ 22.60 Vested (15 ) $ 12.04 Canceled (1 ) $ 14.98 Non-vested restricted stock units, restricted stock, performance shares and performance units at October 25, 2015 27 $ 16.41 2.2 years $ 440 Non-vested restricted stock units, restricted stock, performance shares and performance units expected to vest 24 $ 15.93 2.0 years $ 402 At October 25, 2015 , 1 million additional performance-based awards could be earned upon certain levels of achievement of Applied's TSR relative to a peer group at a future date. The actual tax benefit realized for the tax deductions from vested restricted stock units during fiscal 2015 , 2014 and 2013 totaled $103 million , $61 million and $42 million , respectively. Employee Stock Purchase Plans Under the ESPP, substantially all employees may purchase Applied common stock through payroll deductions at a price equal to 85 percent of the lower of the fair market value of Applied common stock at the beginning or end of each 6 -month purchase period, subject to certain limits. The number of shares issued under the ESPP during fiscal 2015 , 2014 and 2013 was 5 million , 6 million and 7 million , respectively. Compensation expense is calculated using the fair value of the employees’ purchase rights under the Black-Scholes option pricing model. Underlying assumptions used in the model and the weighted average estimated fair value of purchase rights under the ESPP for each fiscal year are outlined in the following table: 2015 2014 2013 ESPP: Dividend yield 2.20 % 1.96 % 2.80 % Expected volatility 31.8 % 26.3 % 24.8 % Risk-free interest rate 0.19 % 0.06 % 0.09 % Expected life (in years) 0.5 0.5 0.5 Weighted average estimated fair value $4.55 $4.56 $3.08 |
Employee Benefit Plans
Employee Benefit Plans | 12 Months Ended |
Oct. 25, 2015 | |
Compensation and Retirement Disclosure [Abstract] | |
Employee Benefit Plans | Employee Benefit Plans Employee Bonus Plans Applied has various employee bonus plans. A discretionary bonus plan provides for the distribution of a percentage of pre-tax income to Applied employees who are not participants in other performance-based incentive plans, up to a maximum percentage of eligible compensation. Other plans provide for bonuses to Applied’s executives and other key contributors based on the achievement of profitability and/or other specified performance criteria. Charges under these plans for fiscal 2015 , 2014 and 2013 were $307 million , $290 million and $269 million , respectively. Employee Savings and Retirement Plan Applied’s Employee Savings and Retirement Plan (the 401(k) Plan) is qualified under Sections 401(a) and (k) of the Internal Revenue Code (the Code). Eligible employees may make salary deferral and catch-up contributions under the 401(k) Plan on a pre-tax basis and on a Roth basis, subject to an annual dollar limit established by the Code. Applied matches 100% of participant salary and/or Roth deferral contributions up to the first 3% of eligible contribution and then 50% of every dollar between 4% and 6% of eligible contribution. Applied does not make matching contributions on any catch-up contributions made by participants. Plan participants who were employed by Applied or any of its affiliates became 100% vested in their Applied matching contribution account balances. Applied’s matching contributions under the 401(k) Plan were approximately $35 million , net of $1 million in forfeitures, for fiscal 2015 and $29 million , net of $1 million in forfeitures, for each of fiscal 2014 and 2013 . Defined Benefit Pension Plans of Foreign Subsidiaries and Other Post-Retirement Benefits Several of Applied’s foreign subsidiaries have defined benefit pension plans covering substantially all of their eligible employees. Benefits under these plans are typically based on years of service and final average compensation levels. The plans are managed in accordance with applicable local statutes and practices. Applied deposits funds for certain of these plans with insurance companies, pension trustees, government-managed accounts, and/or accrues the expense for the unfunded portion of the benefit obligation on its Consolidated Financial Statements. Applied’s practice is to fund the various pension plans in amounts sufficient to meet the minimum requirements as established by applicable local governmental oversight and taxing authorities. Depending on the design of the plan, local custom and market circumstances, the liabilities of a plan may exceed qualified plan assets. The differences between the aggregate projected benefit obligations and aggregate plan assets of these plans have been recorded as liabilities by Applied and are included in other liabilities and accrued expenses in the Consolidated Balance Sheets. Applied also has a U.S. post-retirement plan that provides certain medical and vision benefits to eligible retirees who are at least age 55 and whose years of service plus their age equals at least 65 at their date of retirement. An eligible retiree also may elect coverage for an eligible spouse or domestic partner who is not eligible for Medicare. Coverage under the plan generally ends for both the retiree and spouse or domestic partner upon becoming eligible for Medicare. In addition, Applied also has a post-retirement benefit plan as a result of the acquisition of Varian. Applied’s liability under these post-retirement plans, which was included in other liabilities in the Consolidated Balance Sheets, was $21 million at October 25, 2015 and $34 million at October 26, 2014 . A summary of the changes in benefit obligations and plan assets, which includes post-retirement benefits, for each fiscal year is presented below: 2015 2014 2013 (In millions, except percentages) Change in projected benefit obligation Beginning projected benefit obligation $ 479 $ 445 $ 434 Service cost 15 17 20 Interest cost 13 17 15 Plan participants’ contributions 1 1 1 Actuarial (gain) loss 12 62 (16 ) Curtailments, settlements and special termination benefits (1 ) (26 ) (8 ) Foreign currency exchange rate changes (39 ) (22 ) 10 Benefits paid (9 ) (12 ) (10 ) Plan amendments and business combinations — (3 ) (1 ) Ending projected benefit obligation $ 471 $ 479 $ 445 Ending accumulated benefit obligation $ 434 $ 446 $ 409 Range of assumptions to determine benefit obligations Discount rate 0.9% - 4.4% 1.0% - 4.4% 1.1% - 4.5% Rate of compensation increase 1.9% - 3.6% 2.0% - 4.0% 2.0% - 4.7% Change in plan assets Beginning fair value of plan assets $ 268 $ 248 $ 214 Return on plan assets 19 20 18 Employer contributions 21 48 24 Plan participants’ contributions 1 1 1 Foreign currency exchange rate changes (18 ) (11 ) 8 Divestitures, settlements and business combinations (1 ) (26 ) (7 ) Benefits paid (9 ) (12 ) (10 ) Ending fair value of plan assets $ 281 $ 268 $ 248 Funded status $ (190 ) $ (211 ) $ (197 ) Amounts recognized in the consolidated balance sheets Noncurrent asset $ 19 $ 17 $ 9 Current liability (3 ) (3 ) (4 ) Noncurrent liability (206 ) (225 ) (202 ) Total $ (190 ) $ (211 ) $ (197 ) Estimated amortization from accumulated other comprehensive loss into net periodic benefit cost over the next fiscal period Actuarial loss $ 6 $ 6 $ 4 Prior service cost credit (1 ) — — Total $ 5 $ 6 $ 4 Amounts recognized in accumulated other comprehensive loss Net actuarial loss $ 135 $ 134 $ 91 Prior service cost (credit) — (1 ) 2 Total $ 135 $ 133 $ 93 Plans with projected benefit obligations in excess of plan assets Projected benefit obligation $ 308 $ 326 $ 438 Fair value of plan assets $ 98 $ 98 $ 233 Plans with accumulated benefit obligations in excess of plan assets Accumulated benefit obligation $ 274 $ 297 $ 269 Fair value of plan assets $ 98 $ 98 $ 99 2015 2014 Plan assets — allocation Equity securities 39 % 39 % Debt securities 42 % 38 % Insurance contracts 14 % 15 % Other investments 4 % 5 % Cash 1 % 3 % The following table presents a summary of the ending fair value of the plan assets: October 25, 2015 October 26, 2014 Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total (In millions) Equity securities $ 42 $ 66 $ — $ 108 $ 38 $ 66 $ — $ 104 Debt securities 8 111 — 119 8 94 — 102 Insurance contracts — — 40 40 — — 41 41 Other investments — 12 — 12 — 12 — 12 Cash 2 — — 2 9 — — 9 Total $ 52 $ 189 $ 40 $ 281 $ 55 $ 172 $ 41 $ 268 The following table presents the activity in Level 3 instruments for each fiscal year: 2015 2014 (In millions) Balance, beginning of year $ 41 $ 47 Actual return on plan assets: Relating to assets still held at reporting date 2 — Purchases, sales, settlements, net 1 (2 ) Currency impact (4 ) (4 ) Balance, end of year $ 40 $ 41 Applied’s investment strategy for its defined benefit plans is to invest plan assets in a prudent manner, maintaining well-diversified portfolios with the long-term objective of meeting the obligations of the plans as they come due. Asset allocation decisions are typically made by plan fiduciaries with input from Applied’s international pension committee. Applied’s asset allocation strategy incorporates a sufficient equity exposure in order for the plans to benefit from the expected better long-term performance of equities relative to the plans’ liabilities. Applied retains investment managers, where appropriate, to manage the assets of the plans. Performance of investment managers is monitored by plan fiduciaries with the assistance of local investment consultants. The investment managers make investment decisions within the guidelines set forth by plan fiduciaries. Risk management practices include diversification across asset classes and investment styles, and periodic rebalancing toward target asset allocation ranges. Investment managers may use derivative instruments for efficient portfolio management purposes. Plan assets do not include any of Applied’s own equity or debt securities. A summary of the components of net periodic benefit costs and the weighted average assumptions used for net periodic benefit cost and benefit obligation calculations for each fiscal year is presented below: 2015 2014 2013 (In millions, except percentages) Components of net periodic benefit cost Service cost $ 15 $ 17 $ 20 Interest cost 13 17 15 Expected return on plan assets (15 ) (14 ) (12 ) Amortization of actuarial loss and prior service credit 7 4 6 Settlement and curtailment loss (1 ) 3 — Net periodic benefit cost $ 19 $ 27 $ 29 Weighted average assumptions Discount rate 3.00 % 3.68 % 3.46 % Expected long-term return on assets 5.62 % 5.64 % 5.38 % Rate of compensation increase 2.74 % 3.29 % 3.07 % Asset return assumptions are derived based on actuarial and statistical methodologies, from analysis of long-term historical data relevant to the country in which each plan is in effect and the investments applicable to the corresponding plan. The discount rate for each plan was derived by reference to appropriate benchmark yields on high quality corporate bonds, allowing for the approximate duration of both plan obligations and the relevant benchmark yields. Future expected benefit payments for the pension plans and the post-retirement plan over the next ten fiscal years are as follows: Benefit Payments (In millions) 2016 $ 15 2017 12 2018 11 2019 12 2020 12 2021-2025 72 $ 134 Company contributions to these plans for fiscal 2016 are expected to be approximately $14 million . Executive Deferred Compensation Plans Applied sponsors two unfunded deferred compensation plans, the Executive Deferred Compensation Plan (Predecessor EDCP) and the 2016 Deferred Compensation Plan (2016 DCP) (formerly known as the 2005 Executive Deferred Compensation Plan), under which certain employees may elect to defer a portion of their following year’s eligible earnings. The Predecessor EDCP was frozen as of December 31, 2004 such that no new deferrals could be made under the plan after that date and the plan would qualify for “grandfather” relief under Section 409A of the Code. The Predecessor EDCP participant accounts continue to be maintained under the plan and credited with deemed interest. The 2016 DCP was originally implemented by Applied effective as of January 1, 2005, and amended and restated as of October 12, 2015, and is intended to comply with the requirements of Section 409A of the Code. In addition, Applied also sponsors a non-qualified deferred compensation plan as a result of the acquisition of Varian. Amounts payable, including accrued deemed interest, totaled $38 million at October 25, 2015 , which was included in other liabilities in the Consolidated Balance Sheets. Amounts payable, including accrued deemed interest, totaled $40 million at October 26, 2014 , of which $35 million was included in accounts payable and accrued expenses and $5 million was included in other liabilities in the Consolidated Balance Sheets. |
Income Taxes
Income Taxes | 12 Months Ended |
Oct. 25, 2015 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The components of income before income taxes for each fiscal year were as follows: 2015 2014 2013 (In millions) U.S. $ 629 $ 612 $ 194 Foreign 969 836 156 $ 1,598 $ 1,448 $ 350 The components of the provision for income taxes for each fiscal year were as follows: 2015 2014 2013 (In millions) Current: U.S. $ 134 $ 270 $ 3 Foreign 199 97 72 State 18 27 2 351 394 77 Deferred: U.S. (194 ) (9 ) 34 Foreign 69 (3 ) (19 ) State (5 ) (6 ) 2 (130 ) (18 ) 17 $ 221 $ 376 $ 94 A reconciliation between the statutory U.S. federal income tax rate of 35 percent and Applied’s actual effective income tax rate for each fiscal year is presented below: 2015 2014 2013 Tax provision at U.S. statutory rate 35.0 % 35.0 % 35.0 % Resolutions from prior years’ income tax filings (4.9 ) 2.0 (4.7 ) Effect of foreign operations taxed at various rates (16.3 ) (10.9 ) (21.1 ) State income taxes, net of federal benefit 0.9 1.0 0.8 Research and other tax credits (0.2 ) (0.3 ) (5.4 ) U.S. domestic production deduction (0.6 ) (1.3 ) (1.0 ) Acquisition costs (1.1 ) 0.8 — Goodwill impairment — — 22.5 Share-based compensation 0.8 0.4 2.2 Other 0.2 (0.7 ) (1.4 ) 13.8 % 26.0 % 26.9 % The effective tax rate for fiscal 2015 was lower than the rate for fiscal 2014 due primarily to acquisition costs that became deductible in the second quarter of fiscal 2015 as a result of the termination of the proposed business combination with TEL, an adjustment in the second quarter of fiscal 2015 to correct an error in the recognition of cost of sales in the U.S. related to intercompany sales, reinstatement of the U.S. federal research and development tax credit during the first quarter of fiscal 2015 which was retroactive to its expiration in December 2013, resolutions and changes related to income tax liabilities for prior years, and changes in the geographical composition of income. The effective tax rate for fiscal 2014 was lower than the rate for fiscal 2013 due primarily to nondeductible goodwill impairment charges in fiscal 2013 , offset by resolutions and changes related to prior years and expiration of the U.S. federal research and development tax credit. In the reconciliation between the statutory U.S. federal income tax rate and the actual effective income tax rate for fiscal 2015 , the effect of foreign operations taxed at various rates represents the difference between an income tax provision at the U.S. federal statutory income tax rate and the recorded income tax provision, with the difference expressed as a percentage of worldwide income before income taxes. This effect is substantially related to the tax effect of foreign income before income taxes in jurisdictions with lower statutory tax rates. The foreign operations with the most significant effective tax rate impact are Singapore and Israel. The statutory tax rates for fiscal 2015 for Singapore and Israel are 17% and 26.5% , respectively. Applied has been granted tax holidays for both jurisdictions that expire in fiscal 2026 and fiscal 2017, respectively, excluding potential renewals and subject to certain conditions with which Applied expects to comply. The tax benefit arising from these tax holidays was $ 68 million for fiscal 2015 or $ 0.06 per diluted share. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The components of deferred income tax assets and liabilities were as follows: October 25, October 26, (In millions) Deferred tax assets: Allowance for doubtful accounts $ 20 $ 26 Inventory reserves and basis difference 155 128 Installation and warranty reserves 11 18 Accrued liabilities 106 123 Deferred revenue 17 32 Tax credits and net operating losses 196 160 Deferred compensation 79 44 Share-based compensation 53 57 Fixed assets — 16 Other 150 27 Gross deferred tax assets 787 631 Valuation allowance (207 ) (173 ) Total deferred tax assets 580 458 Deferred tax liabilities: Fixed assets (15 ) — Intangible assets (91 ) (92 ) Undistributed foreign earnings (68 ) (87 ) Foreign exchange (4 ) (12 ) Total gross deferred tax liabilities (178 ) (191 ) Net deferred tax assets $ 402 $ 267 The following table presents the breakdown between current and non-current net deferred tax assets and liabilities: October 25, October 26, (In millions) Current deferred tax asset $ 403 $ 232 Non-current deferred tax asset 55 67 Non-current deferred tax liability (56 ) (32 ) $ 402 $ 267 Current deferred tax liabilities are included in accounts payable and accrued expenses on the Consolidated Balance Sheets and non-current deferred tax liabilities are included in other liabilities on the Consolidated Balance Sheets. A valuation allowance is recorded to reflect the estimated amount of net deferred tax assets that may not be realized. Changes in the valuation allowance in each fiscal year were as follows: 2015 2014 2013 (In millions) Beginning balance $ 173 $ 116 $ 46 Increases 40 60 70 Decreases (6 ) (3 ) — Ending balance $ 207 $ 173 $ 116 For fiscal 2015 , U.S. income taxes have not been provided for approximately $ 4.1 billion of cumulative undistributed earnings of several foreign subsidiaries. Applied intends to reinvest these earnings indefinitely in operations outside of the U.S. If these earnings were distributed to the U.S. in the form of dividends or otherwise, or if the shares of the relevant foreign subsidiaries were sold or otherwise transferred, Applied would be subject to additional U.S. income taxes (subject to an adjustment for foreign tax credits) and foreign withholding taxes. Determination of the amount of unrecognized deferred income tax liability related to these earnings is not practicable. At October 25, 2015 , Applied has state research and development tax credit carryforwards of $179 million , including $143 million of credits that are carried over until exhausted and $36 million which are carried over for 15 years and begin to expire in fiscal 2021. Applied has a net operating loss carryover in state jurisdictions of $34 million which begin to expire in fiscal 2018. Management believes it is more likely than not that all loss and tax credit carryovers at October 25, 2015 , net of valuation allowance, will be utilized in future periods. Applied’s income taxes payable have been reduced by the tax benefits associated with employee stock option transactions. These benefits, credited directly to stockholders’ equity with a corresponding reduction to taxes payable, amounted to $56 million , $27 million and $11 million for fiscal 2015 , 2014 and 2013 , respectively. Applied maintains liabilities for uncertain tax positions. These liabilities involve considerable judgment and estimation and are continuously monitored by management based on the best information available. A reconciliation of the beginning and ending balances of the total amounts of gross unrecognized tax benefits in each fiscal year is as follows: 2015 2014 2013 (In millions) Beginning balance of gross unrecognized tax benefits $ 134 $ 194 $ 174 Settlements with tax authorities (16 ) (143 ) (15 ) Lapses of statutes of limitation (1 ) (2 ) (15 ) Increases in tax positions for current year 43 52 48 Increases in tax positions for prior years 21 42 2 Decreases in tax positions for prior years (4 ) (9 ) — Ending balance of gross unrecognized tax benefits $ 177 $ 134 $ 194 In the provision for income taxes in the Consolidated Statements of Operations, a tax benefit of $6 million , a tax expense of $18 million , and a tax benefit of $1 million were realized in fiscal 2015 , 2014 and 2013 , respectively, related to interest and penalties on unrecognized tax benefits. The liability for interest and penalties for fiscal 2015 , 2014 and 2013 was $14 million , $25 million and $7 million , respectively, and was classified as a non-current liability in the Consolidated Balance Sheets. Included in the ending balance of unrecognized tax benefits for fiscal 2015 , 2014 and 2013 are $167 million , $124 million and $183 million , respectively, of tax benefits that, if recognized, would affect the effective tax rate. Also included in the ending balance of unrecognized tax benefits for fiscal 2015 , 2014 and 2013 are $9 million , $9 million and $10 million respectively, of tax benefits that, if recognized, would result in adjustments to other tax accounts, primarily deferred taxes. In fiscal 2015 , Applied paid $19 million , including interest and penalties, as a result of a settlement of fiscal 2009 through fiscal 2011 in Italy and paid $2 million , including interest, as a result of a settlement of fiscal 2013 in Switzerland. These settlements resulted in the recognition of a tax benefit of $10 million in the Consolidated Statements of Operations. In fiscal 2014, Applied received a refund of $18 million , including interest, as a result of a settlement of fiscal 2008 through fiscal 2012 in Korea, and received a refund of $17 million , including interest, as a result of a settlement with the Internal Revenue Service for fiscal 2010 related to Varian. These settlements resulted in the recognition of a tax benefit of $3 million in the Consolidated Statements of Operations. In fiscal 2013, Applied received a refund of $ 31 million , including interest, as a result of a settlement with the Internal Revenue Service for fiscal 2008 and fiscal 2009. This resulted in the recognition of a tax benefit of $12 million in the Consolidated Statement of Operations. In fiscal 2013, Applied paid $14 million to the Internal Revenue Service as part of an ongoing audit of Varian for fiscal 2010 through fiscal 2012. No tax expense or benefit was recognized. A number of Applied’s tax returns remain subject to examination by taxing authorities. These include U.S. federal and state returns for fiscal 2010 and later years , and tax returns in certain jurisdictions outside of the United States for fiscal 2009 and later years . The timing of the resolution of income tax examinations, as well as the amounts and timing of various tax payments that may be part of the settlement process, is highly uncertain. This could cause large fluctuations in the balance sheet classification of current assets and non-current assets and liabilities. Applied continues to have ongoing negotiations with various taxing authorities throughout the year. |
Warranty, Guarantees, Commitmen
Warranty, Guarantees, Commitments and Contingencies | 12 Months Ended |
Oct. 25, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
Warranty, Guarantees, Commitments and Contingencies | Warranty, Guarantees, Commitments and Contingencies Leases Applied leases some of its facilities and equipment under non-cancelable operating leases and has options to renew most leases, with rentals to be negotiated. Total rent expense for fiscal 2015 , 2014 and 2013 , was $32 million , $37 million and $36 million , respectively. As of October 25, 2015 , future minimum lease payments are expected to be as follows: Lease Payments Fiscal (In millions) 2016 $ 25 2017 16 2018 8 2019 5 2020 3 Thereafter 4 $ 61 Warranty Changes in the warranty reserves during each fiscal year were as follows: 2015 2014 2013 (In millions) Beginning balance $ 113 $ 102 $ 119 Provisions for warranty 117 115 103 Consumption of reserves (104 ) (104 ) (120 ) Ending balance $ 126 $ 113 $ 102 Applied products are generally sold with a 12-month warranty period following installation. The provision for the estimated cost of warranty is recorded when revenue is recognized. Parts and labor are covered under the terms of the warranty agreement. The warranty provision is based on historical experience by product, configuration and geographic region. Quarterly warranty consumption is generally associated with sales that occurred during the preceding four quarters, and quarterly warranty provisions are generally related to the current quarter’s sales. Guarantees In the ordinary course of business, Applied provides standby letters of credit or other guarantee instruments to third parties as required for certain transactions initiated by either Applied or its subsidiaries. As of October 25, 2015 , the maximum potential amount of future payments that Applied could be required to make under these guarantee agreements was approximately $58 million . Applied has not recorded any liability in connection with these guarantee agreements beyond that required to appropriately account for the underlying transaction being guaranteed. Applied does not believe, based on historical experience and information currently available, that it is probable that any amounts will be required to be paid under these guarantee agreements. Applied also has agreements with various banks to facilitate subsidiary banking operations worldwide, including overdraft arrangements, issuance of bank guarantees, and letters of credit. As of October 25, 2015 , Applied Materials Inc. has provided parent guarantees to banks for approximately $100 million to cover these arrangements. In October 2015, a wholly-owned foreign subsidiary of Applied entered into a short-term loan agreement, guaranteed by Applied, under which it borrowed $800 million to facilitate the return of capital to Applied. Legal Matters Korea Criminal Proceedings In 2010, the Seoul Eastern District Court began hearings on indictments brought by the Seoul Prosecutor's Office for the Eastern District of Korea (the Prosecutor's Office) alleging that employees of several companies improperly received and used confidential information belonging to Samsung Electronics Co., Ltd. (Samsung), a major Applied customer based in Korea. The individuals charged included the former head of Applied Materials Korea (AMK), who at the time of the indictment was a vice president of Applied Materials, Inc., and certain other AMK employees. Neither Applied nor any of its subsidiaries was named as a party to the proceedings. Hearings on these matters concluded in November 2012 and the Court issued its decision on February 7, 2013. As part of the ruling, nine AMK employees (including the former head of AMK) were acquitted of all charges, while one AMK employee was found guilty on some of the charges and received a suspended jail sentence. The Prosecutor's Office and various individuals appealed the matter to the High Court. On June 20, 2014, the High Court rendered its decision, finding all defendants not guilty, including all ten AMK employees. The prosecutor has appealed the High Court decision to the Korean Supreme Court. Other Matters From time to time, Applied receives notification from third parties, including customers and suppliers, seeking indemnification, litigation support, payment of money or other actions by Applied in connection with claims made against them. In addition, from time to time, Applied receives notification from third parties claiming that Applied may be or is infringing or misusing their intellectual property or other rights. Applied also is subject to various other legal proceedings and claims, both asserted and unasserted, that arise in the ordinary course of business. Although the outcome of the above-described matters, claims and proceedings cannot be predicted with certainty, Applied does not believe that any will have a material effect on its consolidated financial condition or results of operations. |
Industry Segment Operations
Industry Segment Operations | 12 Months Ended |
Oct. 25, 2015 | |
Segment Reporting [Abstract] | |
Industry Segment Operations | Industry Segment Operations Applied’s four reportable segments remain Silicon Systems, Applied Global Services, Display, and Energy and Environmental Solutions. As defined under the accounting literature, Applied’s chief operating decision-maker has been identified as the President and Chief Executive Officer, who reviews operating results to make decisions about allocating resources and assessing performance for the entire Company. During the third quarter of fiscal 2015, Applied implemented a new management structure, which resulted in changes in Applied’s reporting units. Applied determined its reporting units by first identifying its operating segments, and then assessing whether components of these operating segments constitute a business for which discrete financial information is available and where segment management regularly reviews the operating results of that component. Applied aggregates reporting units within an operating segment that have similar economic characteristics and are similar in nature of their products and services, production processes, type or class of customers, distribution methods and operational environment. Applied identified three reporting units, which include the Transistor and Interconnect Group, Patterning and Packaging Group, and Imaging and Process Control Group, which combine to form the Silicon Systems reporting segment. The new management structure did not affect Applied Global Services, Display and Energy and Environmental Solutions reporting segments. Each operating segment is separately managed and has separate financial results that are reviewed by Applied’s chief operating decision-maker. Each reportable segment contains closely related products that are unique to the particular segment. Segment operating income is determined based upon internal performance measures used by Applied’s chief operating decision-maker. Future changes to this internal financial structure may result in changes to Applied’s reportable segments. Applied derives the segment results directly from its internal management reporting system. The accounting policies Applied uses to derive reportable segment results are substantially the same as those used for external reporting purposes. Management measures the performance of each reportable segment based upon several metrics including orders, net sales and operating income. Management uses these results to evaluate the performance of, and to assign resources to, each of the reportable segments. Applied does not allocate to its reportable segments certain operating expenses that it manages separately at the corporate level, which include costs related to share-based compensation; certain management, finance, legal, human resources, and research, development and engineering functions provided at the corporate level; and unabsorbed information technology and occupancy. In addition, Applied does not allocate to its reportable segments restructuring and asset impairment charges and any associated adjustments related to restructuring actions, unless these actions pertain to a specific reportable segment. Segment operating income excludes interest income/expense and other financial charges and income taxes. Management does not consider the unallocated costs in measuring the performance of the reportable segments. The Silicon Systems reportable segment includes semiconductor capital equipment for etch, rapid thermal processing, deposition, chemical mechanical planarization, metrology and inspection, wafer packaging, and ion implantation. The Applied Global Services segment includes technically differentiated products and services to improve operating efficiency, reduce operating costs and lessen the environmental impact of semiconductor, display and solar customers' factories. Applied Global Services’ products consist of spares, services, certain earlier generation products, remanufactured equipment, and products that have reached a particular stage in the product lifecycle. Customer demand for these products and services is fulfilled through a global distribution system with trained service engineers located in close proximity to customer sites. The Display segment includes products for manufacturing liquid crystal displays (LCDs), organic light-emitting diodes (OLEDs), and other display technologies for TVs, personal computers, tablets, smart phones, and other consumer-oriented devices. The Energy and Environmental Solutions segment includes products for fabricating solar photovoltaic cells and modules, as well as high throughput roll-to-roll deposition equipment for flexible electronics and other applications. Information for each reportable segment for and as of the end of each fiscal year is as follows: Net Sales Operating Income (Loss) Depreciation/ Amortization Capital Expenditures Segment Assets (In millions) 2015: Silicon Systems $ 6,135 $ 1,410 $ 268 $ 115 $ 5,464 Applied Global Services 2,531 664 10 12 2,254 Display 780 156 5 13 456 Energy and Environmental Solutions 213 (61 ) 7 3 118 Total Segment $ 9,659 $ 2,169 $ 290 $ 143 $ 8,292 2014: Silicon Systems $ 5,978 $ 1,391 $ 268 $ 134 $ 5,508 Applied Global Services 2,200 573 11 7 2,042 Display 615 129 5 4 423 Energy and Environmental Solutions 279 15 9 1 173 Total Segment $ 9,072 $ 2,108 $ 293 $ 146 $ 8,146 2013: Silicon Systems $ 4,775 $ 876 $ 260 $ 118 $ 5,525 Applied Global Services 2,023 436 13 7 1,958 Display 538 74 8 6 293 Energy and Environmental Solutions 173 (433 ) 22 1 183 Total Segment $ 7,509 $ 953 $ 303 $ 132 $ 7,959 Operating results for fiscal 2015, 2014 and 2013 included restructuring charges and asset impairments as discussed in detail in Note 11, Restructuring Charges and Asset Impairments. Reconciliations of segment operating results to Applied consolidated totals for each fiscal year are as follows: 2015 2014 2013 (In millions) Total segment operating income $ 2,169 $ 2,108 $ 953 Corporate and unallocated costs (515 ) (540 ) (462 ) Restructuring charges and asset impairments — (5 ) (35 ) Certain items associated with terminated business combination (50 ) (73 ) (17 ) Gain (loss) on derivatives associated with terminated business combination 89 30 (7 ) Income from operations $ 1,693 $ 1,520 $ 432 Reconciliations of depreciation and amortization expense to Applied consolidated totals for each fiscal year are as follows: 2015 2014 2013 (In millions) Total segment depreciation and amortization $ 290 $ 293 $ 303 Depreciation on shared facilities and information technology assets 81 82 107 Consolidated depreciation and amortization $ 371 $ 375 $ 410 Reconciliations of capital expenditures to Applied consolidated totals for each fiscal year are as follows: 2015 2014 2013 (In millions) Total segment capital expenditures $ 143 $ 146 $ 132 Shared facilities and information technology assets 72 95 65 Consolidated capital expenditures $ 215 $ 241 $ 197 Reconciliations of segment assets to Applied consolidated totals for each fiscal year are as follows: October 25, October 26, (In millions) Total segment assets $ 8,292 $ 8,146 Cash and investments 5,911 4,060 Allowance for bad debts (49 ) (58 ) Deferred income taxes 458 299 Other current assets 148 147 Common property, plant and equipment 514 522 Other assets 34 58 Consolidated total assets $ 15,308 $ 13,174 For geographical reporting, revenue by geographic location is determined by the location of customers' facilities to which products were shipped. Long-lived assets consist primarily of property, plant and equipment and equity-method investments, and are attributed to the geographic location in which they are located. Net sales and long-lived assets by geographic region for and as of each fiscal year were as follows: 2015 2014 2013 (In millions) Net sales: United States $ 1,630 $ 1,966 $ 1,473 Taiwan 2,600 2,702 2,640 China 1,623 1,608 787 Korea 1,654 965 924 Japan 1,078 817 685 Europe 642 658 680 Southeast Asia 432 356 320 Total outside United States 8,029 7,106 6,036 Consolidated total $ 9,659 $ 9,072 $ 7,509 October 25, October 26, (In millions) Long-lived assets: United States $ 705 $ 636 Taiwan 39 34 China 46 61 Korea 12 12 Japan 6 5 Europe 75 99 Southeast Asia 73 77 Total outside United States 251 288 Consolidated total $ 956 $ 924 The following customers accounted for at least 10 percent of Applied’s net sales in each fiscal year, which were for products in multiple reportable segments: 2015 2014 2013 Samsung Electronics Co., Ltd. 18 % 12 % 13 % Taiwan Semiconductor Manufacturing Company Limited 15 % 21 % 27 % |
Unaudited Quarterly Consolidate
Unaudited Quarterly Consolidated Financial Data | 12 Months Ended |
Oct. 25, 2015 | |
Quarterly Financial Information Disclosure [Abstract] | |
Unaudited Quarterly Consolidated Financial Data | Unaudited Quarterly Consolidated Financial Data Fiscal Quarter First Second Third Fourth Fiscal Year (In millions, except per share amounts) 2015: Net sales $ 2,359 $ 2,442 $ 2,490 $ 2,368 $ 9,659 Gross profit $ 959 $ 1,016 $ 1,018 $ 959 $ 3,952 Net income $ 348 $ 364 $ 329 $ 336 $ 1,377 Earnings per diluted share $ 0.28 $ 0.29 $ 0.27 $ 0.28 $ 1.12 2014: Net sales $ 2,190 $ 2,353 $ 2,265 $ 2,264 $ 9,072 Gross profit $ 891 $ 1,001 $ 992 $ 959 $ 3,843 Net income $ 253 $ 262 $ 301 $ 256 $ 1,072 Earnings per diluted share $ 0.21 $ 0.21 $ 0.24 $ 0.21 $ 0.87 |
Summary of Significant Accoun26
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Oct. 25, 2015 | |
Accounting Policies [Abstract] | |
Principles of Consolidation and Basis of Presentation | Principles of Consolidation and Basis of Presentation The consolidated financial statements include the accounts of Applied Materials, Inc. and its subsidiaries (Applied or the Company) after elimination of intercompany balances and transactions. All references to a fiscal year apply to Applied’s fiscal year which ends on the last Sunday in October. Fiscal 2015, 2014 and 2013 each contained 52 weeks. Each fiscal quarter of 2015, 2014 and 2013 contained 13 weeks. Certain prior year amounts have been reclassified to conform to current year presentation. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make judgments, estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ materially from those estimates. On an ongoing basis, Applied evaluates its estimates, including those related to accounts receivable and sales allowances, fair values of financial instruments, inventories, intangible assets and goodwill, useful lives of intangible assets and property and equipment, fair values of share-based awards, and income taxes, among others. Applied bases its estimates on historical experience and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. |
Cash Equivalents | Cash Equivalents All highly-liquid investments with a remaining maturity of three months or less at the time of purchase are considered to be cash equivalents. Cash equivalents consist primarily of investments in institutional money market funds. |
Investments | Investments All of Applied’s investments, except equity investments held in privately-held companies, are classified as available-for-sale at the respective balance sheet dates. Investments classified as available-for-sale are recorded at fair value based upon quoted market prices, and any temporary difference between the cost and fair value of an investment is presented as a separate component of accumulated other comprehensive income (loss). The specific identification method is used to determine the gains and losses on investments. Interest earned on cash and investments, as well as realized gains and losses on sale of securities, are included in interest income in the accompanying Consolidated Statements of Operations. Equity investments in privately-held companies are generally accounted for under the cost method of accounting and are periodically assessed for other-than-temporary impairment when an event or circumstance indicates that an other-than-temporary decline in value may have occurred. Applied regularly reviews its investment portfolio to identify and evaluate investments that have indications of possible impairment. Factors considered in determining whether an unrealized loss is considered to be temporary, or other-than-temporary and therefore impaired, include: the length of time and extent to which fair value has been lower than the cost basis; the financial condition, credit quality and near-term prospects of the investee; and whether it is more likely than not that Applied will be required to sell the security prior to recovery. Generally, the contractual terms of investments in marketable securities do not permit settlement at prices less than the amortized cost of the investments. |
Allowances for Doubtful Accounts | Allowance for Doubtful Accounts Applied maintains an allowance for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments. This allowance is based on historical experience, credit evaluations, specific customer collection history and any customer-specific issues Applied has identified. Changes in circumstances, such as an unexpected material adverse change in a major customer’s ability to meet its financial obligation to Applied or its payment trends, may require Applied to further adjust its estimates of the recoverability of amounts due to Applied. Bad debt expense and any reversals are recorded in marketing and selling expense in the Consolidated Statement of Operations. |
Inventories | Inventories Inventories are stated at the lower of cost or market, with cost determined on a first-in, first-out (FIFO) basis. Applied adjusts inventory carrying value for estimated obsolescence equal to the difference between the cost of inventory and the estimated market value based upon assumptions about future demand and market conditions. Applied fully writes down inventories and noncancelable purchase orders for inventory deemed obsolete. Applied performs periodic reviews of inventory items to identify excess inventories on hand by comparing on-hand balances to anticipated usage using recent historical activity as well as anticipated or forecasted demand. If estimates of customer demand diminish further or market conditions become less favorable than those projected by Applied, additional inventory adjustments may be required. |
Property, Plant and Equipment | Property, Plant and Equipment Property, plant and equipment is stated at cost. Depreciation is provided over the estimated useful lives of the assets using the straight-line method. Estimated useful lives for financial reporting purposes are as follows: buildings and improvements, 3 to 30 years; demonstration and manufacturing equipment, 3 to 5 years; software, 3 to 5 years; and furniture, fixtures and other equipment, 3 to 15 years. Land improvements are amortized over the shorter of 15 years or the estimated useful life. Leasehold improvements are amortized over the shorter of five years or the lease term. |
Intangible Assets | Intangible Assets Goodwill and indefinite-lived assets are not amortized, but are reviewed for impairment annually during the fourth quarter of each fiscal year and whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. Purchased technology and other intangible assets are presented at cost, net of accumulated amortization, and are amortized over their estimated useful lives of 1 to 15 years using the straight-line method. |
Long-Lived Assets | Long-Lived Assets Applied reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of these assets or asset group may not be recoverable. Applied assesses these assets for impairment based on estimated future cash flows from these assets. |
Research, Development and Engineering Costs | Research, Development and Engineering Costs Research, development and engineering costs are expensed as incurred. |
Sales and Value Added Taxes | Sales and Value Added Taxes Taxes collected from customers and remitted to governmental authorities are presented on a net basis in the accompanying Consolidated Statements of Operations. |
Warranty | Warranty Applied provides for the estimated cost of warranty when revenue is recognized. Estimated warranty costs are determined by analyzing specific product, current and historical configuration statistics and regional warranty support costs. Applied's warranty obligation is affected by product and component failure rates, material usage and labor costs incurred in correcting product failures during the warranty period. If actual warranty costs differ substantially from Applied's estimates, revisions to the estimated warranty liability would be required. |
Income Taxes | Income Taxes Income tax expense is based on pretax earnings. Deferred tax assets and liabilities are recognized for the expected tax consequences of temporary differences between the book and tax bases of recorded assets and liabilities, net operating losses and tax credit carryforwards. |
Restructuring | Restructuring From time to time, Applied initiates restructuring activities to appropriately align its cost structure relative to prevailing economic and industry conditions and associated customer demand as well as in connection with certain acquisitions. Costs associated with restructuring actions can include termination benefits and related charges in addition to facility closure, contract termination and other related activities. Costs associated with restructuring activities are included in restructuring charges and asset impairments in the Consolidated Statements of Operations. |
Revenue Recognition | Revenue Recognition Applied recognizes revenue when all four revenue recognition criteria have been met: persuasive evidence of an arrangement exists; delivery has occurred or services have been rendered; seller’s price to buyer is fixed or determinable; and collectability is probable. Applied’s shipping terms are customarily FOB Applied shipping point or equivalent terms. Applied’s revenue recognition policy generally results in revenue recognition at the following points: (1) for all transactions where legal title passes to the customer upon shipment or delivery, Applied recognizes revenue upon passage of title for all products that have been demonstrated to meet product specifications prior to shipment; the portion of revenue associated with certain installation-related tasks is deferred, and that revenue is recognized upon completion of the installation-related tasks; (2) for products that have not been demonstrated to meet product specifications prior to shipment, revenue is recognized at customer technical acceptance; (3) for transactions where legal title does not pass at shipment or delivery, revenue is recognized when legal title passes to the customer, which is generally at customer technical acceptance; and (4) for arrangements containing multiple elements, the revenue relating to the undelivered elements is deferred using the relative selling price method utilizing estimated sales prices until delivery of the deferred elements. Applied limits the amount of revenue recognition for delivered elements to the amount that is not contingent on the future delivery of products or services, future performance obligations or subject to customer-specified return or adjustment. In cases where Applied has sold products that have been demonstrated to meet product specifications prior to shipment, Applied believes that at the time of delivery, it has an enforceable claim to amounts recognized as revenue. Spare parts revenue is generally recognized upon shipment, and services revenue is generally recognized over the period that the services are provided. When a sales arrangement contains multiple elements, such as hardware and services and/or software products, Applied allocates revenue to each element based on a selling price hierarchy. The selling price for a deliverable is based on its vendor specific objective evidence (VSOE) if available, third party evidence (TPE) if VSOE is not available, or estimated selling price (ESP) if neither VSOE nor TPE is available. Applied generally utilizes the ESP due to the nature of its products. In multiple element arrangements where more-than-incidental software deliverables are included, revenue is allocated to each separate unit of accounting for each of the non-software deliverables and to the software deliverables as a group using the relative selling prices of each of the deliverables in the arrangement based on the aforementioned selling price hierarchy. If the arrangement contains more than one software deliverable, the arrangement consideration allocated to the software deliverables as a group is then allocated to each software deliverable using the guidance for recognizing software revenue. |
Derivative Financial Instruments | Derivative Financial Instruments Applied uses financial instruments, such as forward exchange and currency option contracts, to hedge a portion of, but not all, existing and anticipated foreign currency denominated transactions typically expected to occur within 24 months. The purpose of Applied’s foreign currency management is to mitigate the effect of exchange rate fluctuations on certain foreign currency denominated revenues, costs and eventual cash flows. The terms of derivative financial instruments used for hedging purposes are generally consistent with the timing of the transactions being hedged. All of Applied’s derivative financial instruments are recorded at fair value based upon quoted market prices for comparable instruments. For derivative instruments designated and qualifying as cash flow hedges, the effective portion of the gain or loss on these hedges is reported as a component of accumulated other comprehensive income (loss) in stockholders’ equity, and is reclassified into earnings when the hedged transaction affects earnings. If the transaction being hedged fails to occur, or if a portion of any derivative is ineffective, the gain or loss on the associated financial instrument is recorded promptly in earnings. For derivative instruments used to hedge existing foreign currency denominated assets or liabilities, the gain or loss on these hedges is recorded promptly in earnings to offset the changes in the fair value of the assets or liabilities being hedged. Applied does not use derivative financial instruments for trading or speculative purposes. Applied does not use derivative financial instruments for trading or speculative purposes. Derivative instruments and hedging activities, including foreign currency exchange contracts and interest rate swap agreements, are recognized on the balance sheet at fair value. Changes in the fair value of derivatives that do not qualify for hedge treatment, as well as the ineffective portion of any hedges, are recognized currently in earnings. All of Applied’s derivative financial instruments are recorded at their fair value in other current assets or in accounts payable and accrued expenses. Hedges related to anticipated transactions are designated and documented at the inception of the hedge as cash flow hedges and foreign exchange derivatives are typically entered into once per month. Cash flow hedges are evaluated for effectiveness quarterly. The effective portion of the gain or loss on these hedges is reported as a component of AOCI in stockholders’ equity and is reclassified into earnings when the hedged transaction affects earnings. The majority of the after-tax net income or loss related to foreign exchange derivative instruments included in AOCI at October 25, 2015 is expected to be reclassified into earnings within 12 months . Changes in the fair value of currency forward exchange and option contracts due to changes in time value are excluded from the assessment of effectiveness. Both ineffective hedge amounts and hedge components excluded from the assessment of effectiveness are recognized in earnings. If the transaction being hedged is no longer probable to occur, or if a portion of any derivative is deemed to be ineffective, Applied promptly recognizes the gain or loss on the associated financial instrument in earnings. The amount recognized due to discontinuance of cash flow hedges that were probable not to occur by the end of the originally specified time period was not significant for fiscal 2015 , 2014 or 2013 . Additionally, forward exchange contracts are generally used to hedge certain foreign currency denominated assets or liabilities. These derivatives are typically entered into once per month and are not designated for hedge accounting treatment. Accordingly, changes in the fair value of these hedges are recorded in earnings to offset the changes in the fair value of the assets or liabilities being hedged. Derivative Financial Instruments Applied conducts business in a number of foreign countries, with certain transactions denominated in local currencies, such as the Japanese yen, euro, Israeli shekel and Taiwanese dollar. Applied uses derivative financial instruments, such as forward exchange contracts and currency option contracts, to hedge certain forecasted foreign currency denominated transactions expected to occur typically within the next 24 months . The purpose of Applied’s foreign currency management is to mitigate the effect of exchange rate fluctuations on certain foreign currency denominated revenues, costs and eventual cash flows. The terms of currency instruments used for hedging purposes are generally consistent with the timing of the transactions being hedged. |
Foreign Currencies | Foreign Currencies As of October 25, 2015 , all of Applied’s subsidiaries use the United States dollar as their functional currency. Accordingly, assets and liabilities of these subsidiaries are remeasured using exchange rates in effect at the end of the period, except for non-monetary assets, such as inventories and property, plant and equipment, which are remeasured using historical exchange rates. Foreign currency-denominated revenues and costs are remeasured using average exchange rates for the period, except for costs related to those balance sheet items that are remeasured using historical exchange rates. The resulting remeasurement gains and losses are included in general and administrative expenses in the Consolidated Statements of Operations as incurred. |
Concentrations of Credit Risk | Concentrations of Credit Risk Financial instruments that potentially subject Applied to significant concentrations of credit risk consist principally of cash equivalents, investments, trade accounts receivable and derivative financial instruments used in hedging activities. Applied invests in a variety of financial instruments, such as, but not limited to, certificates of deposit, corporate and municipal bonds, United States Treasury and agency securities, and asset-backed and mortgage-backed securities, and, by policy, limits the amount of credit exposure with any one financial institution or commercial issuer. Applied performs ongoing credit evaluations of its customers’ financial condition and generally requires no collateral to secure accounts receivable. Applied maintains an allowance reserve for potentially uncollectible accounts receivable based on its assessment of the collectability of accounts receivable. Applied regularly reviews the allowance by considering factors such as historical experience, credit quality, age of the accounts receivable balances, and current economic conditions that may affect a customer’s ability to pay. In addition, Applied utilizes letters of credit to mitigate credit risk when considered appropriate. Applied is exposed to credit-related losses in the event of nonperformance by counterparties to derivative financial instruments, but does not expect any counterparties to fail to meet their obligations. In some instances, Applied has entered into security arrangements which require the counterparties to post collateral to further mitigate credit exposure. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In July 2015, the Financial Accounting Standards Board (FASB) issued authoritative guidance that requires inventory to be measured at the lower of cost and net realizable value instead of at lower of cost or market. This guidance does not apply to inventory that is measured using last-in, first out (LIFO) or the retail inventory method but applies to all other inventory including those measured using first-in, first-out (FIFO) or the average cost method. The authoritative guidance will be effective for Applied in the first quarter of fiscal 2018 and should be applied prospectively. Early adoption is permitted as of the beginning of an interim or annual reporting period. Applied is currently evaluating the effect of this new guidance on Applied's consolidated financial statements. In May 2015, the FASB issued authoritative guidance to remove the requirement to categorize within the fair value hierarchy all investments for which fair value is measured using the net asset value per share practical expedient. The new guidance also removes the requirement of certain disclosures for all investments that are eligible to be measured at fair value using the net asset value per share practical expedient. The guidance becomes effective retrospectively for Applied in the first quarter of fiscal 2017. Early adoption is permitted. The adoption of this guidance will only impact disclosures in Applied's financial statements. In April 2015, the FASB issued authoritative guidance for customers about whether a cloud computing arrangement includes a software license. If a cloud computing arrangement includes a software license, then the customer should account for the software license element of the arrangement consistent with the acquisition of other software licenses. If a cloud computing arrangement does not include a software license, the customer should account for the arrangement as a service contract. This guidance will not change accounting for service contracts. The guidance becomes effective for Applied in the first quarter of fiscal 2017 and may be adopted either (1) prospectively to all arrangements entered into or materially modified after the effective date or (2) retrospectively. Early adoption is permitted. Applied is currently evaluating the effect of this new guidance on Applied's financial position, results of operations and its ongoing financial reporting, including the selection of a transition method. In April 2015, the FASB issued authoritative guidance that requires debt issuance costs to be presented in the balance sheet as a direct deduction from the carrying amount of the related debt liability, consistent with debt discounts. The authoritative guidance is effective for Applied in the first quarter of fiscal 2017 and should be applied retrospectively. Early adoption is permitted. The adoption of this guidance is not expected to have a significant impact on Applied's consolidated financial statements. In May 2014, the FASB issued authoritative guidance that requires revenue recognition to depict the transfer of promised goods or services to a customer in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This new standard will supersede most current revenue recognition guidance, including industry-specific guidance. Entities will have the option of using either a full retrospective or modified retrospective approach to adopting the guidance. Under the modified approach, an entity would recognize the cumulative effect of initially applying the guidance with an adjustment to the opening balance of retained earnings in the period of adoption. In addition, the modified approach will require additional disclosures. In August 2015, the FASB issued an amendment to defer the effective date by one year and allow entities to early adopt no earlier than the original effective date. With this amendment, the guidance will be effective for Applied in the first quarter of fiscal 2019. Applied is currently evaluating the effect of this new guidance on Applied's financial position, results of operations and its ongoing financial reporting, including the selection of a transition method. In April 2014, the FASB issued authoritative guidance that raises the threshold for a disposal transaction to qualify as a discontinued operation and requires additional disclosures about discontinued operations and disposals of individually significant components that do not qualify as discontinued operations. The authoritative guidance becomes effective prospectively for Applied in the first quarter of fiscal 2016. Early adoption is permitted, but only for disposals that have not been reported in financial statements previously issued. |
Fair Value Measurements | Fair Value Measurements Applied’s financial assets are measured and recorded at fair value, except for equity investments in privately-held companies. These equity investments are generally accounted for under the cost method of accounting and are periodically assessed for other-than-temporary impairment when events or circumstances indicate that an other-than-temporary decline in value may have occurred. Applied’s nonfinancial assets, such as goodwill, intangible assets, and property, plant and equipment, are recorded at cost and are assessed for impairment when events or circumstances indicate that an other-than-temporary decline in value may have occurred. Fair Value Hierarchy Applied uses the following fair value hierarchy, which prioritizes the inputs to valuation techniques used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement: • Level 1 — Quoted prices in active markets for identical assets or liabilities; • Level 2 — Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; and • Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Applied’s investments consist primarily of debt securities that are classified as available-for-sale and recorded at their fair values. In determining the fair value of investments, Applied uses pricing information from pricing services that value securities based on quoted market prices and models that utilize observable market inputs. In the event a fair value estimate is unavailable from a pricing service, Applied generally obtains non-binding price quotes from brokers. Applied then reviews the information provided by the pricing services or brokers to determine the fair value of its short-term and long-term investments. In addition, to validate pricing information obtained from pricing services, Applied periodically performs supplemental analysis on a sample of securities. Applied reviews any significant unanticipated differences identified through this analysis to determine the appropriate fair value. Investments with remaining effective maturities of 12 months or less from the balance sheet date are classified as short-term investments. Investments with remaining effective maturities of more than 12 months from the balance sheet date are classified as long-term investments. As of October 25, 2015 , substantially all of Applied’s available-for-sale, short-term and long-term investments were recognized at fair value that was determined based upon observable inputs. |
Goodwill and Purchased Intangible Assets | Goodwill and Purchased Intangible Assets Applied’s methodology for allocating the purchase price relating to purchase acquisitions is determined through established and generally accepted valuation techniques. Goodwill is measured as the excess of the purchase price over the sum of the amounts assigned to tangible and identifiable intangible assets acquired less liabilities assumed. Applied assigns assets acquired (including goodwill) and liabilities assumed to one or more reporting units as of the date of acquisition. Typically, acquisitions relate to a single reporting unit and thus do not require the allocation of goodwill to multiple reporting units. If the products obtained in an acquisition are assigned to multiple reporting units, the goodwill is distributed to the respective reporting units as part of the purchase price allocation process. Goodwill and purchased intangible assets with indefinite useful lives are not amortized, but are reviewed for impairment annually during the fourth quarter of each fiscal year and whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. The process of evaluating the potential impairment of goodwill and intangible assets requires significant judgment, especially in emerging markets. Applied regularly monitors current business conditions and considers other factors including, but not limited to, adverse industry or economic trends, restructuring actions and lower projections of profitability that may impact future operating results. To test goodwill for impairment, Applied first performs a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value. If it is concluded that this is the case, Applied then performs the two-step goodwill impairment test. Otherwise, the two-step goodwill impairment test is not required. Under the two-step goodwill impairment test, Applied would, in the first step, compare the estimated fair value of each reporting unit to its carrying value. Applied determines the fair value of each of its reporting units based on a weighting of income and market approaches. If the carrying value of a reporting unit exceeds its fair value, Applied would then perform the second step of the impairment test in order to determine the implied fair value of the reporting unit’s goodwill. If Applied determines that the carrying value of a reporting unit’s goodwill exceeds its implied fair value, Applied would record an impairment charge equal to the difference. |
Finite-Lived Purchased Intangible Assets | Finite-Lived Purchased Intangible Assets Applied amortizes purchased intangible assets with finite lives using the straight-line method over the estimated economic lives of the assets, ranging from 1 to 15 years. Applied evaluates long-lived assets for impairment whenever events or changes in circumstances indicate the carrying value of an asset group may not be recoverable. Applied assesses the fair value of the assets based on the amount of the undiscounted future cash flow that the assets are expected to generate and recognizes an impairment loss when estimated undiscounted future cash flow expected to result from the use of the asset, plus net proceeds expected from disposition of the asset, if any, are less than the carrying value of the asset. When Applied identifies an impairment, Applied reduces the carrying value of the group of assets to comparable market values, when available and appropriate, or to its estimated fair value based on a discounted cash flow approach. Intangible assets, such as purchased technology, are generally recorded in connection with a business acquisition. The value assigned to intangible assets is usually based on estimates and judgments regarding expectations for the success and life cycle of products and technology acquired. Applied evaluates the useful lives of its intangible assets each reporting period to determine whether events and circumstances require revising the remaining period of amortization. In addition, Applied reviews intangible assets for impairment when events or changes in circumstances indicate their carrying value may not be recoverable. Management considers such indicators as significant differences in actual product acceptance from the estimates, changes in the competitive and economic environments, technological advances, and changes in cost structure. |
Treasury Stock, Policy | Applied records treasury stock purchases under the cost method using the first-in, first-out (FIFO) method. Upon reissuance of treasury stock, amounts in excess of the acquisition cost are credited to additional paid in capital. If Applied reissues treasury stock at an amount below its acquisition cost and additional paid in capital associated with prior treasury stock transactions is insufficient to cover the difference between the acquisition cost and the reissue price, this difference is recorded against retained earnings. |
Deferred Tax Liabilities | Current deferred tax liabilities are included in accounts payable and accrued expenses on the Consolidated Balance Sheets and non-current deferred tax liabilities are included in other liabilities on the Consolidated Balance Sheets. |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 12 Months Ended |
Oct. 25, 2015 | |
Earnings Per Share [Abstract] | |
Elements used in computing both basic and diluted net earnings per share | Applied’s net income has not been adjusted for any period presented for purposes of computing basic or diluted earnings per share due to the Company’s non-complex capital structure. Fiscal Year 2015 2014 2013 (In millions, except per share amounts) Numerator: Net income $ 1,377 $ 1,072 $ 256 Denominator: Weighted average common shares outstanding 1,214 1,215 1,202 Effect of dilutive stock options, restricted stock units and employee stock purchase plan shares 12 16 17 Denominator for diluted earnings per share 1,226 1,231 1,219 Basic earnings per share $ 1.13 $ 0.88 $ 0.21 Diluted earnings per share $ 1.12 $ 0.87 $ 0.21 Potentially dilutive securities — 1 2 |
Cash, Cash Equivalents and In28
Cash, Cash Equivalents and Investments (Tables) | 12 Months Ended |
Oct. 25, 2015 | |
Cash and Cash Equivalents [Abstract] | |
Summary of cash, cash equivalents and investments | The following tables summarize Applied’s cash, cash equivalents and investments by security type: October 25, 2015 Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value (In millions) Cash $ 1,010 $ — $ — $ 1,010 Cash equivalents: Money market funds 3,272 — — 3,272 Non-U.S. government securities* 60 — — 60 Municipal securities 73 — — 73 Commercial paper, corporate bonds and medium-term notes 382 — — 382 Total Cash equivalents 3,787 — — 3,787 Total Cash and Cash equivalents $ 4,797 $ — $ — $ 4,797 Short-term and long-term investments: U.S. Treasury and agency securities $ 84 $ — $ — $ 84 Non-U.S. government securities* 9 — — 9 Municipal securities 384 2 — 386 Commercial paper, corporate bonds and medium-term notes 250 — — 250 Asset-backed and mortgage-backed securities 262 — — 262 Total fixed income securities 989 2 — 991 Publicly traded equity securities 28 17 — 45 Equity investments in privately-held companies 78 — — 78 Total short-term and long-term investments $ 1,095 $ 19 $ — $ 1,114 Total Cash, Cash equivalents and Investments $ 5,892 $ 19 $ — $ 5,911 _________________________ * Includes agency debt securities guaranteed by non-U.S. governments, which consist of Canada and Germany. October 26, 2014 Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Fair Value (In millions) Cash $ 508 $ — $ — $ 508 Cash equivalents: Money market funds 2,494 — — 2,494 Total Cash equivalents 2,494 — — 2,494 Total Cash and Cash equivalents $ 3,002 $ — $ — $ 3,002 Short-term and long-term investments: U.S. Treasury and agency securities $ 62 $ — $ — $ 62 Non-U.S. government securities* 14 — — 14 Municipal securities 391 2 — 393 Commercial paper, corporate bonds and medium-term notes 223 1 — 224 Asset-backed and mortgage-backed securities 287 1 2 286 Total fixed income securities 977 4 2 979 Publicly traded equity securities 19 31 — 50 Equity investments in privately-held companies 66 — — 66 Total short-term and long-term investments $ 1,062 $ 35 $ 2 $ 1,095 Total Cash, Cash equivalents and Investments $ 4,064 $ 35 $ 2 $ 4,097 _________________________ * Includes agency debt securities guaranteed by non-U.S. governments, which consist of Canada and Germany. |
Contractual maturities of investments | The following table summarizes the contractual maturities of Applied’s investments at October 25, 2015 : Cost Estimated Fair Value (In millions) Due in one year or less $ 155 $ 156 Due after one through five years 572 573 No single maturity date** 368 385 $ 1,095 $ 1,114 _________________________ ** Securities with no single maturity date include publicly-traded and privately-held equity securities, and asset-backed and mortgage-backed securities. |
Schedule of gross realized gains and losses on sales of investments | Gross realized gains and losses on sales of investments for each fiscal year were as follows: 2015 2014 2013 (In millions) Gross realized gains $ 9 $ 27 $ 7 Gross realized losses $ 3 $ 2 $ 2 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 12 Months Ended |
Oct. 25, 2015 | |
Fair Value Disclosures [Abstract] | |
Financial assets/liabilities measured at fair value on a recurring basis | Financial assets (excluding cash balances) measured at fair value on a recurring basis are summarized below: October 25, 2015 October 26, 2014 Level 1 Level 2 Total Level 1 Level 2 Total (In millions) Assets: Money market funds $ 3,272 $ — $ 3,272 $ 2,494 $ — $ 2,494 U.S. Treasury and agency securities 72 12 84 43 19 62 Non-U.S. government securities — 69 69 — 14 14 Municipal securities — 459 459 — 393 393 Commercial paper, corporate bonds and medium-term notes — 632 632 — 224 224 Asset-backed and mortgage-backed securities — 262 262 — 286 286 Publicly traded equity securities 45 — 45 50 — 50 Foreign exchange derivative assets — 2 2 — 52 52 Total $ 3,389 $ 1,436 $ 4,825 $ 2,587 $ 988 $ 3,575 |
Derivative Instruments and He30
Derivative Instruments and Hedging Activities (Tables) | 12 Months Ended |
Oct. 25, 2015 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Effect of derivative instruments on the consolidated statement of operations | The effects of derivative instruments on the Consolidated Statements of Operations for each fiscal year were as follows: Effective Portion Ineffective Portion and Amount Derivatives in Cash Flow Hedging Relationships Location of Gain or Gain or Gain or (Loss) Gain or (Loss) (In millions) 2015 Foreign exchange contracts Cost of products sold $ 6 $ 15 $ (4 ) Foreign exchange contracts General and administrative — (6 ) (2 ) Interest rate swaps Interest expense (20 ) — — Total $ (14 ) $ 9 $ (6 ) 2014 Foreign exchange contracts Cost of products sold $ 7 $ 8 $ (2 ) Foreign exchange contracts General and administrative — 1 (2 ) Total $ 7 $ 9 $ (4 ) 2013 Foreign exchange contracts Cost of products sold $ 29 $ 21 $ (3 ) Foreign exchange contracts General and administrative — 7 (1 ) Total $ 29 $ 28 $ (4 ) |
Derivatives not designated as hedging instruments in statement of operations | Amount of Gain or (Loss) Recognized in Income Derivatives Not Designated as Hedging Instruments Location of Gain or 2015 2014 2013 (In millions) Foreign exchange contracts Gain (loss) on derivatives associated with terminated business combination $ 89 $ 30 $ (7 ) Foreign exchange contracts General and administrative 21 19 26 Total $ 110 $ 49 $ 19 |
Accounts Receivable, Net (Table
Accounts Receivable, Net (Tables) | 12 Months Ended |
Oct. 25, 2015 | |
Receivables [Abstract] | |
Changes in allowance for doubtful accounts | Changes in allowance for doubtful accounts for each fiscal year were as follows: 2015 2014 2013 (In millions) Beginning balance $ 58 $ 74 $ 87 Provision — — — Deductions 1 (9 ) (16 ) (13 ) Ending balance $ 49 $ 58 $ 74 _____________________________ 1 Fiscal 2015, 2014 and 2013 deductions represent releases of allowance for doubtful accounts credited to expense as a result of an overall lower risk profile of Applied's customers. |
Balance Sheet Detail (Tables)
Balance Sheet Detail (Tables) | 12 Months Ended |
Oct. 25, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Inventories | October 25, October 26, (In millions) Inventories Customer service spares $ 382 $ 316 Raw materials 438 405 Work-in-process 294 316 Finished goods 719 530 $ 1,833 $ 1,567 |
Other current assets | October 25, October 26, (In millions) Other Current Assets Deferred income taxes, net $ 403 $ 232 Prepaid income taxes and income taxes receivable 127 79 Prepaid expenses and other 194 257 $ 724 $ 568 |
Property, plant and equipment, net | Useful Life October 25, October 26, (In years) (In millions) Property, Plant and Equipment, Net Land and improvements $ 157 $ 156 Buildings and improvements 3-30 1,247 1,227 Demonstration and manufacturing equipment 3-5 920 829 Furniture, fixtures and other equipment 3-15 574 575 Construction in progress 48 61 Gross property, plant and equipment 2,946 2,848 Accumulated depreciation (2,054 ) (1,987 ) $ 892 $ 861 |
Accounts payable and accrued expenses | October 25, October 26, (In millions) Accounts Payable and Accrued Expenses Accounts payable $ 658 $ 613 Compensation and employee benefits 509 524 Warranty 126 113 Income taxes payable 60 142 Dividends payable 116 122 Other accrued taxes 58 51 Interest payable 36 30 Other 270 288 $ 1,833 $ 1,883 |
Customer deposits and deferred revenue | October 25, October 26, (In millions) Customer Deposits and Deferred Revenue Customer deposits $ 132 $ 286 Deferred revenue 633 654 $ 765 $ 940 |
Other liabilities | October 25, October 26, (In millions) Other Liabilities Deferred income taxes $ 56 $ 32 Income taxes payable 227 225 Defined and postretirement benefit plans 187 208 Other 85 71 $ 555 $ 536 |
Goodwill, Purchased Technolog33
Goodwill, Purchased Technology and Other Intangible Assets (Tables) | 12 Months Ended |
Oct. 25, 2015 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Indefinite-lived intangible assets | Details of goodwill and other indefinite-lived intangible assets were as follows: October 25, 2015 October 26, 2014 Goodwill Other Intangible Assets Total Goodwill Other Intangible Assets Total (In millions) Silicon Systems $ 2,151 $ — $ 2,151 $ 2,151 $ 103 $ 2,254 Applied Global Services 1,027 5 1,032 1,027 6 1,033 Display 124 18 142 126 18 144 Energy and Environmental Solutions — 2 2 — — — Carrying amount $ 3,302 $ 25 $ 3,327 $ 3,304 $ 127 $ 3,431 |
Summary of purchased technology and intangible assets | A summary of Applied's purchased technology and intangible assets is set forth below: October 25, October 26, (In millions) Purchased technology, net $ 575 $ 636 Intangible assets - finite-lived, net 162 188 Intangible assets - indefinite-lived 25 127 Total $ 762 $ 951 |
Finite-lived intangible assets | Details of finite-lived intangible assets were as follows: October 25, 2015 October 26, 2014 Purchased Technology Other Intangible Assets Total Purchased Technology Other Intangible Assets Total (In millions) Gross carrying amount: Silicon Systems $ 1,449 $ 252 $ 1,701 $ 1,346 $ 252 $ 1,598 Applied Global Services 28 44 72 28 44 72 Display 110 33 143 110 33 143 Energy and Environmental Solutions 4 12 16 5 17 22 Gross carrying amount $ 1,591 $ 341 $ 1,932 $ 1,489 $ 346 $ 1,835 Accumulated amortization: Silicon Systems $ (876 ) $ (95 ) $ (971 ) $ (716 ) $ (77 ) $ (793 ) Applied Global Services (26 ) (44 ) (70 ) (24 ) (44 ) (68 ) Display (110 ) (33 ) (143 ) (110 ) (31 ) (141 ) Energy and Environmental Solutions (4 ) (7 ) (11 ) (3 ) (6 ) (9 ) Accumulated amortization $ (1,016 ) $ (179 ) $ (1,195 ) $ (853 ) $ (158 ) $ (1,011 ) Carrying amount $ 575 $ 162 $ 737 $ 636 $ 188 $ 824 |
Summary of amortization expense | Details of amortization expense for each fiscal year by segment were as follows: 2015 2014 2013 (In millions) Silicon Systems $ 179 $ 173 $ 172 Applied Global Services 1 3 5 Display 2 2 6 Energy and Environmental Solutions 4 6 16 Total $ 186 $ 184 $ 199 |
Schedule of categories amortization expense was charged to | Amortization expense for each fiscal year was charged to the following categories: 2015 2014 2013 (In millions) Cost of products sold $ 163 $ 159 $ 166 Research, development and engineering 1 1 1 Marketing and selling 20 21 26 General and administrative 2 3 6 Total $ 186 $ 184 $ 199 |
Future estimated amortization expense | As of October 25, 2015 , future estimated amortization expense is expected to be as follows: Amortization Expense (In millions) 2016 189 2017 186 2018 185 2019 44 2020 39 Thereafter 94 Total $ 737 |
Borrowing Facilities and Debt (
Borrowing Facilities and Debt (Tables) | 12 Months Ended |
Oct. 25, 2015 | |
Debt Disclosure [Abstract] | |
Debt Outstanding | Debt outstanding as of October 25, 2015 and October 26, 2014 was as follows: Principal Amount October 25, October 26, Effective Interest Rate Interest Pay Dates (In millions) Short-term debt: 2.650% Senior Notes Due 2016 $ 400 $ — 2.666% June 15, December 15 Other debt 800 $ — 1.0% - 1.25% Total short-term debt 1,200 — Long-term debt: 2.650% Senior Notes Due 2016 — 400 2.666% June 15, December 15 7.125% Senior Notes Due 2017 200 200 7.190% April 15, October 15 2.625% Senior Notes Due 2020 600 — 2.640% April 1, October 1 4.300% Senior Notes Due 2021 750 750 4.326% June 15, December 15 3.900% Senior Notes Due 2025 700 — 3.944% April 1, October 1 5.100% Senior Notes Due 2035 500 — 5.127% April 1, October 1 5.850% Senior Notes Due 2041 600 600 5.879% June 15, December 15 3,350 1,950 Total unamortized discount (8 ) (3 ) Total long-term debt 3,342 1,947 Total debt $ 4,542 $ 1,947 |
Restructuring Charges and Ass35
Restructuring Charges and Asset Impairments (Tables) | 12 Months Ended |
Oct. 25, 2015 | |
Restructuring and Related Activities [Abstract] | |
Components of the restructuring and asset impairment | The following table summarizes major components of the restructuring and asset impairment charges during each fiscal year: 2015 2014 2013 (In millions) 2012 Global Restructuring Plan Severance and other employee-related costs $ (1 ) $ 5 $ 39 2012 EES Restructuring Plan Severance and other employee-related costs — — 8 Contract cancellation and other costs (2 ) — 6 Asset impairments — — 12 Others Severance and other employee-related costs 9 — 2 Contract cancellation and other costs 1 — (4 ) Asset impairments 7 — — $ 14 $ 5 $ 63 |
Restructuring and asset impairment charges by segment | Restructuring and asset impairment charges for each fiscal year were recorded as follows: 2015 2014 2013 (In millions) Silicon Systems $ — $ — $ 1 Applied Global Services — — 2 Energy and Environmental Solutions 15 — 25 Corporate Unallocated (1 ) 5 35 Total $ 14 $ 5 $ 63 |
Changes in restructuring reserves related to other restructuring plans and facilities realignment | Changes in restructuring reserves were as follows: 2012 Global Restructuring Plan 2012 EES Restructuring Plan Others Severance and Other Employee-Related Costs Severance and Other Employee-Related Costs Contract Cancellation and Other Costs Severance and Other Employee-Related Costs Contract Cancellation and Other Costs Total (In millions) Balance, October 28, 2012 $ 106 $ 16 $ 1 $ 5 $ 5 $ 133 Provision for restructuring reserves 35 7 8 2 — 52 Consumption of reserves (111 ) (18 ) (2 ) (5 ) — (136 ) Adjustment of restructuring reserves (4 ) — (2 ) — (4 ) (10 ) Balance, October 27, 2013 $ 26 $ 5 $ 5 $ 2 $ 1 $ 39 Provision for restructuring reserves 7 — — — — 7 Consumption of reserves (27 ) (5 ) (1 ) (2 ) — (35 ) Adjustment of restructuring reserves (2 ) — — — — (2 ) Balance, October 26, 2014 $ 4 $ — $ 4 $ — $ 1 $ 9 Provision for restructuring reserves — — — 8 1 9 Consumption of reserves (2 ) — (1 ) (5 ) (1 ) (9 ) Adjustment of restructuring reserves (1 ) — (2 ) — — (3 ) Balance, October 25, 2015 $ 1 $ — $ 1 $ 3 $ 1 $ 6 |
Stockholders' Equity, Compreh36
Stockholders' Equity, Comprehensive Income and Share-Based Compensation (Tables) | 12 Months Ended |
Oct. 25, 2015 | |
Equity [Abstract] | |
Components of accumulated other comprehensive loss, after-tax basis | Changes in the components of AOCI, net of tax, were as follows: Unrealized Gain (Loss) on Investments, Net Unrealized Gain (Loss) on Derivative Instruments Qualifying as Cash Flow Hedges Defined and Postretirement Benefit Plans Cumulative Translation Adjustments Total (In millions) Balance at October 27, 2013 $ 25 $ 2 $ (72 ) $ 7 $ (38 ) Other comprehensive income (loss) before reclassifications 8 4 (36 ) (2 ) (26 ) Amounts reclassified out of AOCI (9 ) (6 ) 3 — (12 ) Other comprehensive loss, net of tax (1 ) (2 ) (33 ) (2 ) (38 ) Balance at October 26, 2014 $ 24 $ — $ (105 ) $ 5 $ (76 ) Other comprehensive income (loss) before reclassifications (11 ) (9 ) (5 ) — (25 ) Amounts reclassified out of AOCI 1 (6 ) 5 9 9 Other comprehensive income (loss), net of tax (10 ) (15 ) — 9 (16 ) Balance at October 25, 2015 $ 14 $ (15 ) $ (105 ) $ 14 $ (92 ) |
Summary of stock repurchases | The following table summarizes Applied’s stock repurchases for each fiscal year: 2015 2014 2013 (In millions, except per share amounts) Shares of common stock repurchased 76 — 18 Cost of stock repurchased $ 1,325 — $ 245 Average price paid per share $ 17.33 — $ 13.60 |
Total share-based compensation and related tax benefits | Applied recognized total share-based compensation expense related to stock options, ESPP shares, restricted stock, restricted stock units, performance shares and performance units, and related tax benefits for each fiscal year as follows: 2015 2014 2013 (In millions) Share-based compensation $ 187 $ 177 $ 162 Tax benefit recognized $ 52 $ 50 $ 45 |
Effect of share-based compensation on the results of operations | The effect of share-based compensation on the results of operations for each fiscal year was as follows: 2015 2014 2013 (In millions) Cost of products sold $ 57 $ 53 $ 50 Research, development, and engineering 69 66 53 Marketing and selling 26 23 20 General and administrative 35 35 34 Restructuring charge — — 5 Total $ 187 $ 177 $ 162 |
Weighted average assumptions used for stock options granted and assumed | The weighted average assumptions used in the model for the stock options granted and assumed are outlined below: 2013 Stock Options: Dividend yield 2.7 % Expected volatility 29.5 % Risk-free interest rate 1.44 % Expected life (in years) 4.5 |
Information with repsect to stock options | Information with respect to stock options for each fiscal year is as follows: 2015 2014 2013 (In millions) Aggregate intrinsic value of outstanding stock options $ 6 $ 19 $ 49 Total intrinsic value of stock options exercised $ 6 $ 39 $ 63 Total fair value of stock options vested $ 1 $ 1 $ 4 Cash received from stock option exercises $ 3 $ 29 $ 88 Actual tax benefit realized from options exercised $ 2 $ 12 $ 19 |
Stock option activity | Stock option activity during each fiscal year was as follows: 2015 2014 2013 Shares Weighted Average Exercise Price Shares Weighted Average Exercise Price Shares Weighted Average Exercise Price (In millions, except per share amounts) Outstanding, beginning of year 2 $ 10.87 6 $ 9.12 21 $ 10.53 Granted and assumed in Varian acquisition — $ — — $ — 1 $ 15.06 Exercised (1 ) $ 5.90 (4 ) $ 7.85 (11 ) $ 8.16 Canceled and forfeited — $ — — $ — (5 ) $ 17.62 Outstanding, end of year 1 $ 12.45 2 $ 10.87 6 $ 9.12 Exercisable, end of year 1 $ 10.98 1 $ 7.97 5 $ 7.90 |
Options outstanding and exercisable | The following table summarizes information with respect to options outstanding and exercisable at October 25, 2015 : Options Outstanding Options Exercisable Range of Exercise Prices Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Life Aggregate Intrinsic Value Number of Shares Weighted Average Exercise Price Aggregate Intrinsic Value (In millions) (In years) (In millions) (In millions) (In millions) $3.36 — $9.99 — $ 5.58 1.12 $ 4 — $ 5.58 $ 4 $10.00 — $15.06 1 $ 15.03 4.80 2 1 $ 15.00 1 1 $ 12.45 3.79 $ 6 1 $ 10.98 $ 5 Options exercisable and expected to become exercisable 1 $ 12.45 3.79 $ 6 |
Restricted stock units and restricted stock activity | A summary of the changes in restricted stock units, restricted stock, performance shares and performance units outstanding under Applied’s equity compensation plans is presented below: Shares Weighted Average Grant Date Fair Value Weighted Average Remaining Contractual Term Aggregate Intrinsic Value (In millions, except per share amounts) Non-vested restricted stock units, restricted stock, performance shares and performance units at October 28, 2012 36 $ 11.53 2.6 years $ 376 Granted 19 $ 10.55 Vested (11 ) $ 11.44 Canceled (6 ) $ 11.28 Non-vested restricted stock units, restricted stock, performance shares and performance units at October 27, 2013 38 $ 11.11 2.4 years $ 662 Granted 11 $ 16.58 Vested (13 ) $ 11.13 Canceled (3 ) $ 11.72 Non-vested restricted stock units, restricted stock, performance shares and performance units at October 26, 2014 33 $ 12.59 2.3 years $ 698 Granted 10 $ 22.60 Vested (15 ) $ 12.04 Canceled (1 ) $ 14.98 Non-vested restricted stock units, restricted stock, performance shares and performance units at October 25, 2015 27 $ 16.41 2.2 years $ 440 Non-vested restricted stock units, restricted stock, performance shares and performance units expected to vest 24 $ 15.93 2.0 years $ 402 |
Significant valuation assumptions in relation to ESPP | Underlying assumptions used in the model and the weighted average estimated fair value of purchase rights under the ESPP for each fiscal year are outlined in the following table: 2015 2014 2013 ESPP: Dividend yield 2.20 % 1.96 % 2.80 % Expected volatility 31.8 % 26.3 % 24.8 % Risk-free interest rate 0.19 % 0.06 % 0.09 % Expected life (in years) 0.5 0.5 0.5 Weighted average estimated fair value $4.55 $4.56 $3.08 |
Employee Benefit Plans (Tables)
Employee Benefit Plans (Tables) | 12 Months Ended |
Oct. 25, 2015 | |
Compensation and Retirement Disclosure [Abstract] | |
Changes in benefit obligations and plan assets including post-retirement benefits | A summary of the changes in benefit obligations and plan assets, which includes post-retirement benefits, for each fiscal year is presented below: 2015 2014 2013 (In millions, except percentages) Change in projected benefit obligation Beginning projected benefit obligation $ 479 $ 445 $ 434 Service cost 15 17 20 Interest cost 13 17 15 Plan participants’ contributions 1 1 1 Actuarial (gain) loss 12 62 (16 ) Curtailments, settlements and special termination benefits (1 ) (26 ) (8 ) Foreign currency exchange rate changes (39 ) (22 ) 10 Benefits paid (9 ) (12 ) (10 ) Plan amendments and business combinations — (3 ) (1 ) Ending projected benefit obligation $ 471 $ 479 $ 445 Ending accumulated benefit obligation $ 434 $ 446 $ 409 Range of assumptions to determine benefit obligations Discount rate 0.9% - 4.4% 1.0% - 4.4% 1.1% - 4.5% Rate of compensation increase 1.9% - 3.6% 2.0% - 4.0% 2.0% - 4.7% Change in plan assets Beginning fair value of plan assets $ 268 $ 248 $ 214 Return on plan assets 19 20 18 Employer contributions 21 48 24 Plan participants’ contributions 1 1 1 Foreign currency exchange rate changes (18 ) (11 ) 8 Divestitures, settlements and business combinations (1 ) (26 ) (7 ) Benefits paid (9 ) (12 ) (10 ) Ending fair value of plan assets $ 281 $ 268 $ 248 Funded status $ (190 ) $ (211 ) $ (197 ) Amounts recognized in the consolidated balance sheets Noncurrent asset $ 19 $ 17 $ 9 Current liability (3 ) (3 ) (4 ) Noncurrent liability (206 ) (225 ) (202 ) Total $ (190 ) $ (211 ) $ (197 ) Estimated amortization from accumulated other comprehensive loss into net periodic benefit cost over the next fiscal period Actuarial loss $ 6 $ 6 $ 4 Prior service cost credit (1 ) — — Total $ 5 $ 6 $ 4 Amounts recognized in accumulated other comprehensive loss Net actuarial loss $ 135 $ 134 $ 91 Prior service cost (credit) — (1 ) 2 Total $ 135 $ 133 $ 93 Plans with projected benefit obligations in excess of plan assets Projected benefit obligation $ 308 $ 326 $ 438 Fair value of plan assets $ 98 $ 98 $ 233 Plans with accumulated benefit obligations in excess of plan assets Accumulated benefit obligation $ 274 $ 297 $ 269 Fair value of plan assets $ 98 $ 98 $ 99 2015 2014 Plan assets — allocation Equity securities 39 % 39 % Debt securities 42 % 38 % Insurance contracts 14 % 15 % Other investments 4 % 5 % Cash 1 % 3 % |
Summary of ending fair value of the plan assets | The following table presents a summary of the ending fair value of the plan assets: October 25, 2015 October 26, 2014 Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total (In millions) Equity securities $ 42 $ 66 $ — $ 108 $ 38 $ 66 $ — $ 104 Debt securities 8 111 — 119 8 94 — 102 Insurance contracts — — 40 40 — — 41 41 Other investments — 12 — 12 — 12 — 12 Cash 2 — — 2 9 — — 9 Total $ 52 $ 189 $ 40 $ 281 $ 55 $ 172 $ 41 $ 268 |
Activity in Level 3 instruments | The following table presents the activity in Level 3 instruments for each fiscal year: 2015 2014 (In millions) Balance, beginning of year $ 41 $ 47 Actual return on plan assets: Relating to assets still held at reporting date 2 — Purchases, sales, settlements, net 1 (2 ) Currency impact (4 ) (4 ) Balance, end of year $ 40 $ 41 |
Schedule of net benefit costs and assumptions used | A summary of the components of net periodic benefit costs and the weighted average assumptions used for net periodic benefit cost and benefit obligation calculations for each fiscal year is presented below: 2015 2014 2013 (In millions, except percentages) Components of net periodic benefit cost Service cost $ 15 $ 17 $ 20 Interest cost 13 17 15 Expected return on plan assets (15 ) (14 ) (12 ) Amortization of actuarial loss and prior service credit 7 4 6 Settlement and curtailment loss (1 ) 3 — Net periodic benefit cost $ 19 $ 27 $ 29 Weighted average assumptions Discount rate 3.00 % 3.68 % 3.46 % Expected long-term return on assets 5.62 % 5.64 % 5.38 % Rate of compensation increase 2.74 % 3.29 % 3.07 % |
Schedule of expected benefit payments | Future expected benefit payments for the pension plans and the post-retirement plan over the next ten fiscal years are as follows: Benefit Payments (In millions) 2016 $ 15 2017 12 2018 11 2019 12 2020 12 2021-2025 72 $ 134 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Oct. 25, 2015 | |
Income Tax Disclosure [Abstract] | |
Components of income from operations before income taxes | The components of income before income taxes for each fiscal year were as follows: 2015 2014 2013 (In millions) U.S. $ 629 $ 612 $ 194 Foreign 969 836 156 $ 1,598 $ 1,448 $ 350 |
Components of the provision for income taxes | The components of the provision for income taxes for each fiscal year were as follows: 2015 2014 2013 (In millions) Current: U.S. $ 134 $ 270 $ 3 Foreign 199 97 72 State 18 27 2 351 394 77 Deferred: U.S. (194 ) (9 ) 34 Foreign 69 (3 ) (19 ) State (5 ) (6 ) 2 (130 ) (18 ) 17 $ 221 $ 376 $ 94 |
Effective income tax rate continuing operations tax rate reconciliation | A reconciliation between the statutory U.S. federal income tax rate of 35 percent and Applied’s actual effective income tax rate for each fiscal year is presented below: 2015 2014 2013 Tax provision at U.S. statutory rate 35.0 % 35.0 % 35.0 % Resolutions from prior years’ income tax filings (4.9 ) 2.0 (4.7 ) Effect of foreign operations taxed at various rates (16.3 ) (10.9 ) (21.1 ) State income taxes, net of federal benefit 0.9 1.0 0.8 Research and other tax credits (0.2 ) (0.3 ) (5.4 ) U.S. domestic production deduction (0.6 ) (1.3 ) (1.0 ) Acquisition costs (1.1 ) 0.8 — Goodwill impairment — — 22.5 Share-based compensation 0.8 0.4 2.2 Other 0.2 (0.7 ) (1.4 ) 13.8 % 26.0 % 26.9 % |
Components of deferred income tax assets and liabilities | The components of deferred income tax assets and liabilities were as follows: October 25, October 26, (In millions) Deferred tax assets: Allowance for doubtful accounts $ 20 $ 26 Inventory reserves and basis difference 155 128 Installation and warranty reserves 11 18 Accrued liabilities 106 123 Deferred revenue 17 32 Tax credits and net operating losses 196 160 Deferred compensation 79 44 Share-based compensation 53 57 Fixed assets — 16 Other 150 27 Gross deferred tax assets 787 631 Valuation allowance (207 ) (173 ) Total deferred tax assets 580 458 Deferred tax liabilities: Fixed assets (15 ) — Intangible assets (91 ) (92 ) Undistributed foreign earnings (68 ) (87 ) Foreign exchange (4 ) (12 ) Total gross deferred tax liabilities (178 ) (191 ) Net deferred tax assets $ 402 $ 267 The following table presents the breakdown between current and non-current net deferred tax assets and liabilities: October 25, October 26, (In millions) Current deferred tax asset $ 403 $ 232 Non-current deferred tax asset 55 67 Non-current deferred tax liability (56 ) (32 ) $ 402 $ 267 |
Summary of valuation allowance | A valuation allowance is recorded to reflect the estimated amount of net deferred tax assets that may not be realized. Changes in the valuation allowance in each fiscal year were as follows: 2015 2014 2013 (In millions) Beginning balance $ 173 $ 116 $ 46 Increases 40 60 70 Decreases (6 ) (3 ) — Ending balance $ 207 $ 173 $ 116 |
A reconciliation of gross unrecognized tax benefits | A reconciliation of the beginning and ending balances of the total amounts of gross unrecognized tax benefits in each fiscal year is as follows: 2015 2014 2013 (In millions) Beginning balance of gross unrecognized tax benefits $ 134 $ 194 $ 174 Settlements with tax authorities (16 ) (143 ) (15 ) Lapses of statutes of limitation (1 ) (2 ) (15 ) Increases in tax positions for current year 43 52 48 Increases in tax positions for prior years 21 42 2 Decreases in tax positions for prior years (4 ) (9 ) — Ending balance of gross unrecognized tax benefits $ 177 $ 134 $ 194 |
Warranty, Guarantees, Commitm39
Warranty, Guarantees, Commitments and Contingencies (Tables) | 12 Months Ended |
Oct. 25, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
Future minimum lease payments | As of October 25, 2015 , future minimum lease payments are expected to be as follows: Lease Payments Fiscal (In millions) 2016 $ 25 2017 16 2018 8 2019 5 2020 3 Thereafter 4 $ 61 |
Changes in the warranty reserves | Changes in the warranty reserves during each fiscal year were as follows: 2015 2014 2013 (In millions) Beginning balance $ 113 $ 102 $ 119 Provisions for warranty 117 115 103 Consumption of reserves (104 ) (104 ) (120 ) Ending balance $ 126 $ 113 $ 102 |
Industry Segment Operations (Ta
Industry Segment Operations (Tables) | 12 Months Ended |
Oct. 25, 2015 | |
Segment Reporting [Abstract] | |
Net sales and operating income (loss) for each reportable segment | Information for each reportable segment for and as of the end of each fiscal year is as follows: Net Sales Operating Income (Loss) Depreciation/ Amortization Capital Expenditures Segment Assets (In millions) 2015: Silicon Systems $ 6,135 $ 1,410 $ 268 $ 115 $ 5,464 Applied Global Services 2,531 664 10 12 2,254 Display 780 156 5 13 456 Energy and Environmental Solutions 213 (61 ) 7 3 118 Total Segment $ 9,659 $ 2,169 $ 290 $ 143 $ 8,292 2014: Silicon Systems $ 5,978 $ 1,391 $ 268 $ 134 $ 5,508 Applied Global Services 2,200 573 11 7 2,042 Display 615 129 5 4 423 Energy and Environmental Solutions 279 15 9 1 173 Total Segment $ 9,072 $ 2,108 $ 293 $ 146 $ 8,146 2013: Silicon Systems $ 4,775 $ 876 $ 260 $ 118 $ 5,525 Applied Global Services 2,023 436 13 7 1,958 Display 538 74 8 6 293 Energy and Environmental Solutions 173 (433 ) 22 1 183 Total Segment $ 7,509 $ 953 $ 303 $ 132 $ 7,959 |
Reconciliations of total segment operating income to Applied's consolidated operating income | Reconciliations of segment operating results to Applied consolidated totals for each fiscal year are as follows: 2015 2014 2013 (In millions) Total segment operating income $ 2,169 $ 2,108 $ 953 Corporate and unallocated costs (515 ) (540 ) (462 ) Restructuring charges and asset impairments — (5 ) (35 ) Certain items associated with terminated business combination (50 ) (73 ) (17 ) Gain (loss) on derivatives associated with terminated business combination 89 30 (7 ) Income from operations $ 1,693 $ 1,520 $ 432 |
Reconciliations of depreciation and amortization expense to Applied's consolidated totals | Reconciliations of depreciation and amortization expense to Applied consolidated totals for each fiscal year are as follows: 2015 2014 2013 (In millions) Total segment depreciation and amortization $ 290 $ 293 $ 303 Depreciation on shared facilities and information technology assets 81 82 107 Consolidated depreciation and amortization $ 371 $ 375 $ 410 |
Reconciliation of capital expenditures to Applied's consolidated totals | Reconciliations of capital expenditures to Applied consolidated totals for each fiscal year are as follows: 2015 2014 2013 (In millions) Total segment capital expenditures $ 143 $ 146 $ 132 Shared facilities and information technology assets 72 95 65 Consolidated capital expenditures $ 215 $ 241 $ 197 |
Reconciliation of segment assets to Applied's consolidated totals | Reconciliations of segment assets to Applied consolidated totals for each fiscal year are as follows: October 25, October 26, (In millions) Total segment assets $ 8,292 $ 8,146 Cash and investments 5,911 4,060 Allowance for bad debts (49 ) (58 ) Deferred income taxes 458 299 Other current assets 148 147 Common property, plant and equipment 514 522 Other assets 34 58 Consolidated total assets $ 15,308 $ 13,174 |
Net sales and long-lived assets by geographic region | Net sales and long-lived assets by geographic region for and as of each fiscal year were as follows: 2015 2014 2013 (In millions) Net sales: United States $ 1,630 $ 1,966 $ 1,473 Taiwan 2,600 2,702 2,640 China 1,623 1,608 787 Korea 1,654 965 924 Japan 1,078 817 685 Europe 642 658 680 Southeast Asia 432 356 320 Total outside United States 8,029 7,106 6,036 Consolidated total $ 9,659 $ 9,072 $ 7,509 October 25, October 26, (In millions) Long-lived assets: United States $ 705 $ 636 Taiwan 39 34 China 46 61 Korea 12 12 Japan 6 5 Europe 75 99 Southeast Asia 73 77 Total outside United States 251 288 Consolidated total $ 956 $ 924 |
Companies accounted for at least 10 percent of Applied's net sales | The following customers accounted for at least 10 percent of Applied’s net sales in each fiscal year, which were for products in multiple reportable segments: 2015 2014 2013 Samsung Electronics Co., Ltd. 18 % 12 % 13 % Taiwan Semiconductor Manufacturing Company Limited 15 % 21 % 27 % |
Unaudited Quarterly Consolida41
Unaudited Quarterly Consolidated Financial Data (Tables) | 12 Months Ended |
Oct. 25, 2015 | |
Quarterly Financial Information Disclosure [Abstract] | |
Unaudited Quarterly Consolidated Financial Data | Fiscal Quarter First Second Third Fourth Fiscal Year (In millions, except per share amounts) 2015: Net sales $ 2,359 $ 2,442 $ 2,490 $ 2,368 $ 9,659 Gross profit $ 959 $ 1,016 $ 1,018 $ 959 $ 3,952 Net income $ 348 $ 364 $ 329 $ 336 $ 1,377 Earnings per diluted share $ 0.28 $ 0.29 $ 0.27 $ 0.28 $ 1.12 2014: Net sales $ 2,190 $ 2,353 $ 2,265 $ 2,264 $ 9,072 Gross profit $ 891 $ 1,001 $ 992 $ 959 $ 3,843 Net income $ 253 $ 262 $ 301 $ 256 $ 1,072 Earnings per diluted share $ 0.21 $ 0.21 $ 0.24 $ 0.21 $ 0.87 |
Summary of Significant Accoun42
Summary of Significant Accounting Policies (Operating Cycle) (Details) | 3 Months Ended | 12 Months Ended | |||||||||||||
Oct. 25, 2015 | Jul. 26, 2015 | Apr. 26, 2015 | Jan. 25, 2015 | Oct. 26, 2014 | Jul. 27, 2014 | Apr. 27, 2014 | Jan. 26, 2014 | Oct. 27, 2013 | Jul. 28, 2013 | Apr. 28, 2013 | Jan. 27, 2013 | Oct. 25, 2015 | Oct. 26, 2014 | Oct. 27, 2013 | |
Accounting Policies [Abstract] | |||||||||||||||
Operating Cycle1 | 91 days | 91 days | 91 days | 91 days | 91 days | 91 days | 91 days | 91 days | 91 days | 91 days | 91 days | 91 days | 364 days | 364 days | 364 days |
Summary of Significant Accoun43
Summary of Significant Accounting Policies (Useful Life) (Details) | 12 Months Ended |
Oct. 25, 2015 | |
Minimum | |
Property, Plant and Equipment [Line Items] | |
Intangible assets estimated useful lives | 1 year |
Maximum | |
Property, Plant and Equipment [Line Items] | |
Intangible assets estimated useful lives | 15 years |
Building and improvements | Minimum | |
Property, Plant and Equipment [Line Items] | |
Useful life | 3 years |
Building and improvements | Maximum | |
Property, Plant and Equipment [Line Items] | |
Useful life | 30 years |
Demonstration and manufacturing equipment | Minimum | |
Property, Plant and Equipment [Line Items] | |
Useful life | 3 years |
Demonstration and manufacturing equipment | Maximum | |
Property, Plant and Equipment [Line Items] | |
Useful life | 5 years |
Software | Minimum | |
Property, Plant and Equipment [Line Items] | |
Useful life | 3 years |
Software | Maximum | |
Property, Plant and Equipment [Line Items] | |
Useful life | 5 years |
Furniture, fixtures and other equipment | Minimum | |
Property, Plant and Equipment [Line Items] | |
Useful life | 3 years |
Furniture, fixtures and other equipment | Maximum | |
Property, Plant and Equipment [Line Items] | |
Useful life | 15 years |
Land improvements | Maximum | |
Property, Plant and Equipment [Line Items] | |
Term of amortization | 15 years |
Leasehold improvements | Maximum | |
Property, Plant and Equipment [Line Items] | |
Term of amortization | 5 years |
Earnings Per Share (Details)
Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Oct. 25, 2015 | Jul. 26, 2015 | Apr. 26, 2015 | Jan. 25, 2015 | Oct. 26, 2014 | Jul. 27, 2014 | Apr. 27, 2014 | Jan. 26, 2014 | Oct. 25, 2015 | Oct. 26, 2014 | Oct. 27, 2013 | |
Numerator: | |||||||||||
Net income | $ 336 | $ 329 | $ 364 | $ 348 | $ 256 | $ 301 | $ 262 | $ 253 | $ 1,377 | $ 1,072 | $ 256 |
Denominator: | |||||||||||
Weighted average common shares outstanding | 1,214 | 1,215 | 1,202 | ||||||||
Effect of dilutive stock options, restricted stock units and employee stock purchase plan shares | 12 | 16 | 17 | ||||||||
Denominator for diluted earnings per share | 1,226 | 1,231 | 1,219 | ||||||||
Basic earnings per share (in dollars per share) | $ 1.13 | $ 0.88 | $ 0.21 | ||||||||
Diluted earnings per share (in dollars per share) | $ 0.28 | $ 0.27 | $ 0.29 | $ 0.28 | $ 0.21 | $ 0.24 | $ 0.21 | $ 0.21 | $ 1.12 | $ 0.87 | $ 0.21 |
Potentially dilutive securities | 0 | 1 | 2 |
Cash, Cash Equivalents and In45
Cash, Cash Equivalents and Investments (Cash, Cash Equivalents and Investments by Security Type) (Details) - USD ($) $ in Millions | Oct. 25, 2015 | Oct. 26, 2014 | Oct. 27, 2013 | Oct. 28, 2012 | ||
Schedule of Investment Income, Reported Amounts, by Category [Line Items] | ||||||
Cash | $ 1,010 | $ 508 | ||||
Cash equivalents: | ||||||
Money market funds | 3,272 | 2,494 | ||||
Non-U.S. government securities | [1] | 60 | ||||
Municipal securities | 73 | |||||
Commercial paper, corporate bonds and medium-term notes | 382 | |||||
Total Cash equivalents | 3,787 | 2,494 | ||||
Total Cash and Cash equivalents | 4,797 | 3,002 | $ 1,711 | $ 1,392 | ||
Short-term and long-term investments: | ||||||
Cost | 1,095 | 1,062 | ||||
Gross Unrealized Gains | 19 | 35 | ||||
Gross Unrealized Losses | 0 | 2 | ||||
Estimated Fair Value | 1,114 | 1,095 | ||||
Equity investments in privately-held companies | 78 | 66 | ||||
Total Cash, Cash equivalents and Investments | ||||||
Cost | 5,892 | 4,064 | ||||
Gross Unrealized Gains | 19 | 35 | ||||
Gross Unrealized Losses | 0 | 2 | ||||
Estimated Fair Value | 5,911 | 4,097 | ||||
Total fixed income securities [Member] | ||||||
Short-term and long-term investments: | ||||||
Cost | 989 | 977 | ||||
Gross Unrealized Gains | 2 | 4 | ||||
Gross Unrealized Losses | 0 | 2 | ||||
Estimated Fair Value | 991 | 979 | ||||
U.S. Treasury and agency securities | ||||||
Short-term and long-term investments: | ||||||
Cost | 84 | 62 | ||||
Gross Unrealized Gains | 0 | 0 | ||||
Gross Unrealized Losses | 0 | 0 | ||||
Estimated Fair Value | 84 | 62 | ||||
Non-U.S. government securities | ||||||
Short-term and long-term investments: | ||||||
Cost | 9 | [1] | 14 | |||
Gross Unrealized Gains | 0 | [1] | 0 | |||
Gross Unrealized Losses | 0 | [1] | 0 | |||
Estimated Fair Value | 9 | [1] | 14 | |||
Municipal securities | ||||||
Short-term and long-term investments: | ||||||
Cost | 384 | 391 | ||||
Gross Unrealized Gains | 2 | 2 | ||||
Gross Unrealized Losses | 0 | 0 | ||||
Estimated Fair Value | 386 | 393 | ||||
Commercial paper, corporate bonds and medium-term notes | ||||||
Short-term and long-term investments: | ||||||
Cost | 250 | 223 | ||||
Gross Unrealized Gains | 0 | 1 | ||||
Gross Unrealized Losses | 0 | 0 | ||||
Estimated Fair Value | 250 | 224 | ||||
Asset-backed and mortgage-backed securities | ||||||
Short-term and long-term investments: | ||||||
Cost | 262 | 287 | ||||
Gross Unrealized Gains | 0 | 1 | ||||
Gross Unrealized Losses | 0 | 2 | ||||
Estimated Fair Value | 262 | 286 | ||||
Publicly traded equity securities | ||||||
Short-term and long-term investments: | ||||||
Cost | 28 | 19 | ||||
Gross Unrealized Gains | 17 | 31 | ||||
Gross Unrealized Losses | 0 | 0 | ||||
Estimated Fair Value | $ 45 | $ 50 | ||||
[1] | Includes agency debt securities guaranteed by non-U.S. governments, which consist of Canada and Germany. |
Cash, Cash Equivalents and In46
Cash, Cash Equivalents and Investments (Contractual Maturities) (Details) $ in Millions | Oct. 25, 2015USD ($) | |
Cash and Cash Equivalents [Abstract] | ||
Due in one year or less, Cost | $ 155 | |
Due after one through five years, Cost | 572 | |
No single maturity date, Cost | 368 | [1] |
Investments maturities amortized, Cost | 1,095 | |
Due in one year or less, Estimated Fair Value | 156 | |
Due after one through five years, Estimated Fair Value | 573 | |
No single maturity date, Estimated Fair Value | 385 | [1] |
Investments maturities, Estimated Fair Value | $ 1,114 | |
[1] | Securities with no single maturity date include publicly-traded and privately-held equity securities, and asset-backed and mortgage-backed securities. |
Cash, Cash Equivalents and In47
Cash, Cash Equivalents and Investments (Gains and Losses on Investments) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Oct. 25, 2015 | Oct. 26, 2014 | Oct. 27, 2013 | |
Gains and Losses on Investments | |||
Gross realized gains | $ 9 | $ 27 | $ 7 |
Gross realized losses | $ 3 | $ 2 | $ 2 |
Cash, Cash Equivalents and In48
Cash, Cash Equivalents and Investments (Narrative) (Details) - USD ($) | 12 Months Ended | ||
Oct. 25, 2015 | Oct. 26, 2014 | Oct. 27, 2013 | |
Marketable securities | |||
Schedule of Investment Income, Reported Amounts, by Category [Line Items] | |||
Impairments of investments | $ 0 | $ 0 | $ 0 |
Equity investments in privately-held companies | |||
Schedule of Investment Income, Reported Amounts, by Category [Line Items] | |||
Impairments of investments | $ 9,000,000 | $ 15,000,000 | $ 6,000,000 |
Fair Value Measurements (Assets
Fair Value Measurements (Assets Measured at Fair Value on a Recurring Basis) (Details) - Fair Value, Measurements, Recurring - USD ($) $ in Millions | Oct. 25, 2015 | Oct. 26, 2014 |
Assets: | ||
Foreign exchange derivative assets | $ 2 | $ 52 |
Total assets | 4,825 | 3,575 |
Money market funds | ||
Assets: | ||
Investment securities | 3,272 | 2,494 |
U.S. Treasury and agency securities | ||
Assets: | ||
Investment securities | 84 | 62 |
Non-U.S. government securities | ||
Assets: | ||
Investment securities | 69 | 14 |
Municipal securities | ||
Assets: | ||
Investment securities | 459 | 393 |
Commercial paper, corporate bonds and medium-term notes | ||
Assets: | ||
Investment securities | 632 | 224 |
Asset-backed and mortgage-backed securities | ||
Assets: | ||
Investment securities | 262 | 286 |
Publicly traded equity securities | ||
Assets: | ||
Investment securities | 45 | 50 |
Level 1 | ||
Assets: | ||
Foreign exchange derivative assets | 0 | 0 |
Total assets | 3,389 | 2,587 |
Level 1 | Money market funds | ||
Assets: | ||
Investment securities | 3,272 | 2,494 |
Level 1 | U.S. Treasury and agency securities | ||
Assets: | ||
Investment securities | 72 | 43 |
Level 1 | Non-U.S. government securities | ||
Assets: | ||
Investment securities | 0 | 0 |
Level 1 | Municipal securities | ||
Assets: | ||
Investment securities | 0 | 0 |
Level 1 | Commercial paper, corporate bonds and medium-term notes | ||
Assets: | ||
Investment securities | 0 | 0 |
Level 1 | Asset-backed and mortgage-backed securities | ||
Assets: | ||
Investment securities | 0 | 0 |
Level 1 | Publicly traded equity securities | ||
Assets: | ||
Investment securities | 45 | 50 |
Level 2 | ||
Assets: | ||
Foreign exchange derivative assets | 2 | 52 |
Total assets | 1,436 | 988 |
Level 2 | Money market funds | ||
Assets: | ||
Investment securities | 0 | 0 |
Level 2 | U.S. Treasury and agency securities | ||
Assets: | ||
Investment securities | 12 | 19 |
Level 2 | Non-U.S. government securities | ||
Assets: | ||
Investment securities | 69 | 14 |
Level 2 | Municipal securities | ||
Assets: | ||
Investment securities | 459 | 393 |
Level 2 | Commercial paper, corporate bonds and medium-term notes | ||
Assets: | ||
Investment securities | 632 | 224 |
Level 2 | Asset-backed and mortgage-backed securities | ||
Assets: | ||
Investment securities | 262 | 286 |
Level 2 | Publicly traded equity securities | ||
Assets: | ||
Investment securities | $ 0 | $ 0 |
Fair Value Measurements (Narrat
Fair Value Measurements (Narrative) (Details) - USD ($) | 12 Months Ended | ||
Oct. 25, 2015 | Oct. 26, 2014 | Oct. 27, 2013 | |
Schedule of Investment Income, Reported Amounts, by Category [Line Items] | |||
Fair value of level one and level two transfers amount | $ 0 | $ 0 | |
Equity investments in privately-held companies | |||
Schedule of Investment Income, Reported Amounts, by Category [Line Items] | |||
Impairments of investments | 9,000,000 | 15,000,000 | $ 6,000,000 |
Reported Value Measurement | |||
Schedule of Investment Income, Reported Amounts, by Category [Line Items] | |||
Long-term debt value | 3,300,000,000 | 1,900,000,000 | |
Reported Value Measurement | Short Term And Long Term Investments | Equity investments in privately-held companies | |||
Schedule of Investment Income, Reported Amounts, by Category [Line Items] | |||
Equity investments in privately-held companies measured on non-recurring basis | 78,000,000 | 66,000,000 | |
Portion at Other than Fair Value Measurement | |||
Schedule of Investment Income, Reported Amounts, by Category [Line Items] | |||
Equity investments in privately-held companies measured on non-recurring basis | 70,000,000 | 57,000,000 | |
Estimate of Fair Value Measurement | Level 2 | |||
Schedule of Investment Income, Reported Amounts, by Category [Line Items] | |||
Long-term debt value | 3,500,000,000 | 2,200,000,000 | |
Estimate of Fair Value Measurement | Fair Value, Measurements, Nonrecurring | Level 3 | |||
Schedule of Investment Income, Reported Amounts, by Category [Line Items] | |||
Equity investments in privately-held companies measured on non-recurring basis | $ 8,000,000 | $ 9,000,000 |
Derivative Instruments and He51
Derivative Instruments and Hedging Activities (Narrative) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Oct. 25, 2015 | Oct. 26, 2014 | Oct. 27, 2013 | |
Derivative [Line Items] | |||
Time period for hedging of foreign currency transactions | 24 months | ||
Time period over which majority of after tax gain loss related to derivatives to be reclassified into earnings | 12 months | ||
Gain or (Loss) Recognized in Income | $ 110 | $ 49 | $ 19 |
Tokyo Electron Limited | Foreign exchange contracts | |||
Derivative [Line Items] | |||
Derivative instruments not designated as hedging instruments, Loss | 12 | ||
Gain or (Loss) Recognized in Income | 89 | 42 | |
Fair Value, Measurements, Recurring | Tokyo Electron Limited | Foreign exchange contracts | |||
Derivative [Line Items] | |||
Derivative assets | $ 52 | ||
Designated as Hedging Instrument | Interest Rate Swap | |||
Derivative [Line Items] | |||
Notional Amount | 600 | ||
Loss on derivative | $ 20 | ||
Time period over which majority of after tax gain loss related to derivatives to be reclassified into earnings | 10 years |
Derivative Instruments and He52
Derivative Instruments and Hedging Activities (Derivatives in Cash Flow Hedging Relationships) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Oct. 25, 2015 | Oct. 26, 2014 | Oct. 27, 2013 | |
Derivative Instruments, Gain (Loss) [Line Items] | |||
Gain or (Loss) Recognized in AOCI | $ (14) | $ 7 | $ 29 |
Gain or (Loss) Reclassified from AOCI into Income | 9 | 9 | 28 |
Gain or (Loss) Recognized in Income | (6) | (4) | (4) |
Foreign exchange contracts | Cost of products sold | |||
Derivative Instruments, Gain (Loss) [Line Items] | |||
Gain or (Loss) Recognized in AOCI | 6 | 7 | 29 |
Gain or (Loss) Reclassified from AOCI into Income | 15 | 8 | 21 |
Gain or (Loss) Recognized in Income | (4) | (2) | (3) |
Foreign exchange contracts | General and administrative | |||
Derivative Instruments, Gain (Loss) [Line Items] | |||
Gain or (Loss) Recognized in AOCI | 0 | 0 | 0 |
Gain or (Loss) Reclassified from AOCI into Income | (6) | 1 | 7 |
Gain or (Loss) Recognized in Income | (2) | $ (2) | $ (1) |
Interest Rate Swap | Interest Expense | |||
Derivative Instruments, Gain (Loss) [Line Items] | |||
Gain or (Loss) Recognized in AOCI | (20) | ||
Gain or (Loss) Reclassified from AOCI into Income | 0 | ||
Gain or (Loss) Recognized in Income | $ 0 |
Derivative Instruments and He53
Derivative Instruments and Hedging Activities (Derivatives Not Designated as Hedging Instruments) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Oct. 25, 2015 | Oct. 26, 2014 | Oct. 27, 2013 | |
Derivative Instruments, Gain (Loss) [Line Items] | |||
Gain or (Loss) Recognized in Income | $ 110 | $ 49 | $ 19 |
Foreign exchange contracts | Gain (loss) on derivatives associated with terminated business combination | |||
Derivative Instruments, Gain (Loss) [Line Items] | |||
Gain or (Loss) Recognized in Income | 89 | 30 | (7) |
Foreign exchange contracts | General and administrative | |||
Derivative Instruments, Gain (Loss) [Line Items] | |||
Gain or (Loss) Recognized in Income | $ 21 | $ 19 | $ 26 |
Accounts Receivable, Net (Sale
Accounts Receivable, Net (Sale and Discounting of Accounts Receivable) (Details) $ in Millions | 12 Months Ended |
Oct. 26, 2014USD ($) | |
Receivables [Abstract] | |
Factored accounts receivable and discounted promissory notes | $ 45 |
Discounted letters of credit | $ 29 |
Accounts Receivable, Net (Net o
Accounts Receivable, Net (Net of Allowance for Doubtful Accounts) (Details) - USD ($) $ in Millions | 12 Months Ended | |||
Oct. 25, 2015 | Oct. 26, 2014 | Oct. 27, 2013 | ||
Valuation and Qualifying Accounts Disclosure [Line Items] | ||||
Allowance for doubtful accounts | $ 49 | $ 58 | ||
Allowance for Doubtful Accounts | ||||
Changes in allowance for doubtful accounts | ||||
Beginning balance | 58 | 74 | $ 87 | |
Provision | 0 | 0 | 0 | |
Deductions | [1] | (9) | (16) | (13) |
Ending balance | $ 49 | $ 58 | $ 74 | |
[1] | Fiscal 2015, 2014 and 2013 deductions represent releases of allowance for doubtful accounts credited to expense as a result of an overall lower risk profile of Applied's customers. |
Balance Sheet Detail (Inventory
Balance Sheet Detail (Inventory) (Details) - USD ($) $ in Millions | Oct. 25, 2015 | Oct. 26, 2014 |
Inventories | ||
Customer service spares | $ 382 | $ 316 |
Raw materials | 438 | 405 |
Work-in-process | 294 | 316 |
Finished goods | 719 | 530 |
Total Inventories | 1,833 | 1,567 |
Inventory at customer locations included in finished goods | 155 | 104 |
Evaluation inventory | $ 185 | $ 164 |
Balance Sheet Detail (Other Cur
Balance Sheet Detail (Other Current Assets) (Details) - USD ($) $ in Millions | Oct. 25, 2015 | Oct. 26, 2014 |
Other Current Assets | ||
Deferred income taxes, net | $ 403 | $ 232 |
Prepaid income taxes and income taxes receivable | 127 | 79 |
Prepaid expenses and other | 194 | 257 |
Total Other Current Assets | $ 724 | $ 568 |
Balance Sheet Detail (Property,
Balance Sheet Detail (Property, Plant and Equipment) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Oct. 25, 2015 | Oct. 26, 2014 | Oct. 27, 2013 | |
Property, Plant and Equipment, Net | |||
Gross property, plant and equipment | $ 2,946 | $ 2,848 | |
Accumulated depreciation | (2,054) | (1,987) | |
Net property, plant and equipment | 892 | 861 | |
Depreciation | 185 | 191 | $ 211 |
Land and improvements | |||
Property, Plant and Equipment, Net | |||
Gross property, plant and equipment | 157 | 156 | |
Building and improvements | |||
Property, Plant and Equipment, Net | |||
Gross property, plant and equipment | $ 1,247 | 1,227 | |
Building and improvements | Minimum | |||
Property, Plant and Equipment, Net | |||
Useful life | 3 years | ||
Building and improvements | Maximum | |||
Property, Plant and Equipment, Net | |||
Useful life | 30 years | ||
Demonstration and manufacturing equipment | |||
Property, Plant and Equipment, Net | |||
Gross property, plant and equipment | $ 920 | 829 | |
Demonstration and manufacturing equipment | Minimum | |||
Property, Plant and Equipment, Net | |||
Useful life | 3 years | ||
Demonstration and manufacturing equipment | Maximum | |||
Property, Plant and Equipment, Net | |||
Useful life | 5 years | ||
Furniture, fixtures and other equipment | |||
Property, Plant and Equipment, Net | |||
Gross property, plant and equipment | $ 574 | 575 | |
Furniture, fixtures and other equipment | Minimum | |||
Property, Plant and Equipment, Net | |||
Useful life | 3 years | ||
Furniture, fixtures and other equipment | Maximum | |||
Property, Plant and Equipment, Net | |||
Useful life | 15 years | ||
Construction in progress | |||
Property, Plant and Equipment, Net | |||
Gross property, plant and equipment | $ 48 | $ 61 |
Balance Sheet Detail Balance Sh
Balance Sheet Detail Balance Sheet Account Detail (Restructuring Charges and Asset Impairments) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Oct. 25, 2015 | Oct. 26, 2014 | Oct. 27, 2013 | |
Restructuring Cost and Reserve [Line Items] | |||
Restructuring charges and asset impairments | $ 14 | $ 5 | $ 63 |
2012 EES Restructuring Plan | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring charges and asset impairments | (2) | ||
2012 EES Restructuring Plan | Asset Impairments | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring charges and asset impairments | $ 4 | $ 12 |
Balance Sheet Detail (Accounts
Balance Sheet Detail (Accounts Payable and Accrued Expenses) (Details) - USD ($) $ in Millions | Oct. 25, 2015 | Oct. 26, 2014 |
Accounts Payable and Accrued Expenses | ||
Accounts payable | $ 658 | $ 613 |
Compensation and employee benefits | 509 | 524 |
Warranty | 126 | 113 |
Income taxes payable | 60 | 142 |
Dividends payable | 116 | 122 |
Other accrued taxes | 58 | 51 |
Interest payable | 36 | 30 |
Other | 270 | 288 |
Total accounts payable and accrued expenses | $ 1,833 | $ 1,883 |
Balance Sheet Detail (Customer
Balance Sheet Detail (Customer Deposits) (Details) - USD ($) $ in Millions | Oct. 25, 2015 | Oct. 26, 2014 |
Customer Deposits and Deferred Revenue | ||
Customer deposits | $ 132 | $ 286 |
Deferred revenue | 633 | 654 |
Total Customer Deposits and Deferred Revenue | $ 765 | $ 940 |
Balance Sheet Detail (Other Lia
Balance Sheet Detail (Other Liabilities) (Details) - USD ($) $ in Millions | Oct. 25, 2015 | Oct. 26, 2014 |
Other Liabilities | ||
Deferred income taxes | $ 56 | $ 32 |
Income taxes payable | 227 | 225 |
Defined and postretirement benefit plans | 187 | 208 |
Other | 85 | 71 |
Total Other Liabilities | $ 555 | $ 536 |
Business Combinations (Narrativ
Business Combinations (Narrative) (Details) | Apr. 26, 2015USD ($) |
Tokyo Electron Limited | |
Business Combinations [Line Items] | |
Business Combination, Termination Fee | $ 0 |
Goodwill, Purchased Technolog64
Goodwill, Purchased Technology and Other Intangible Assets (Narrative) (Details) $ in Millions | 12 Months Ended | |
Oct. 25, 2015USD ($)reportable_unit | Oct. 27, 2013USD ($) | |
Schedule of Goodwill and Intangible Assets [Line Items] | ||
Number of reporting units | reportable_unit | 3 | |
Weight of discounted cash flow method | 75.00% | |
Weight of guideline company method | 25.00% | |
Change in gross carrying amount of the amortized intangible assets | $ (104) | |
Energy and Environmental Solutions | ||
Schedule of Goodwill and Intangible Assets [Line Items] | ||
Impairment of goodwill | $ 224 | |
Accumulated goodwill impairment | $ 645 | |
Impairment of intangible assets (excluding goodwill) | $ 54 | |
Minimum | ||
Schedule of Goodwill and Intangible Assets [Line Items] | ||
Useful Life | 1 year | |
Maximum | ||
Schedule of Goodwill and Intangible Assets [Line Items] | ||
Useful Life | 15 years |
Goodwill, Purchased Technolog65
Goodwill, Purchased Technology and Other Intangible Assets (Goodwill and Other Indefinite-lived Intangible Assets) (Details) - USD ($) $ in Millions | Oct. 25, 2015 | Oct. 26, 2014 |
Indefinite-lived intangible assets | ||
Goodwill | $ 3,302 | $ 3,304 |
Other Intangible Assets | 25 | 127 |
Total | 3,327 | 3,431 |
Silicon Systems | ||
Indefinite-lived intangible assets | ||
Goodwill | 2,151 | 2,151 |
Other Intangible Assets | 0 | 103 |
Total | 2,151 | 2,254 |
Applied Global Services | ||
Indefinite-lived intangible assets | ||
Goodwill | 1,027 | 1,027 |
Other Intangible Assets | 5 | 6 |
Total | 1,032 | 1,033 |
Display | ||
Indefinite-lived intangible assets | ||
Goodwill | 124 | 126 |
Other Intangible Assets | 18 | 18 |
Total | 142 | 144 |
Energy and Environmental Solutions | ||
Indefinite-lived intangible assets | ||
Goodwill | 0 | 0 |
Other Intangible Assets | 2 | 0 |
Total | $ 2 | $ 0 |
Goodwill, Purchased Technolog66
Goodwill, Purchased Technology and Other Intangible Assets (Purchased Technology and Intangible Assets) (Details) - USD ($) $ in Millions | Oct. 25, 2015 | Oct. 26, 2014 |
Summary of Purchased Technology and Intangible Assets [Line Items] | ||
Carrying amount | $ 737 | $ 824 |
Intangible assets - indefinite-lived | 25 | 127 |
Total | 762 | 951 |
Purchased Technology | ||
Summary of Purchased Technology and Intangible Assets [Line Items] | ||
Carrying amount | 575 | 636 |
Intangible Assets | ||
Summary of Purchased Technology and Intangible Assets [Line Items] | ||
Carrying amount | $ 162 | $ 188 |
Goodwill, Purchased Technolog67
Goodwill, Purchased Technology and Other Intangible Assets (Finite-lived Intangible Assets) (Details) - USD ($) $ in Millions | Oct. 25, 2015 | Oct. 26, 2014 |
Amortized intangible assets | ||
Gross carrying amount | $ 1,932 | $ 1,835 |
Accumulated amortization | (1,195) | (1,011) |
Carrying amount | 737 | 824 |
Silicon Systems | ||
Amortized intangible assets | ||
Gross carrying amount | 1,701 | 1,598 |
Accumulated amortization | (971) | (793) |
Applied Global Services | ||
Amortized intangible assets | ||
Gross carrying amount | 72 | 72 |
Accumulated amortization | (70) | (68) |
Display | ||
Amortized intangible assets | ||
Gross carrying amount | 143 | 143 |
Accumulated amortization | (143) | (141) |
Energy and Environmental Solutions | ||
Amortized intangible assets | ||
Gross carrying amount | 16 | 22 |
Accumulated amortization | (11) | (9) |
Purchased Technology | ||
Amortized intangible assets | ||
Gross carrying amount | 1,591 | 1,489 |
Accumulated amortization | (1,016) | (853) |
Carrying amount | 575 | 636 |
Purchased Technology | Silicon Systems | ||
Amortized intangible assets | ||
Gross carrying amount | 1,449 | 1,346 |
Accumulated amortization | (876) | (716) |
Purchased Technology | Applied Global Services | ||
Amortized intangible assets | ||
Gross carrying amount | 28 | 28 |
Accumulated amortization | (26) | (24) |
Purchased Technology | Display | ||
Amortized intangible assets | ||
Gross carrying amount | 110 | 110 |
Accumulated amortization | (110) | (110) |
Purchased Technology | Energy and Environmental Solutions | ||
Amortized intangible assets | ||
Gross carrying amount | 4 | 5 |
Accumulated amortization | (4) | (3) |
Other | ||
Amortized intangible assets | ||
Gross carrying amount | 341 | 346 |
Accumulated amortization | (179) | (158) |
Carrying amount | 162 | 188 |
Other | Silicon Systems | ||
Amortized intangible assets | ||
Gross carrying amount | 252 | 252 |
Accumulated amortization | (95) | (77) |
Other | Applied Global Services | ||
Amortized intangible assets | ||
Gross carrying amount | 44 | 44 |
Accumulated amortization | (44) | (44) |
Other | Display | ||
Amortized intangible assets | ||
Gross carrying amount | 33 | 33 |
Accumulated amortization | (33) | (31) |
Other | Energy and Environmental Solutions | ||
Amortized intangible assets | ||
Gross carrying amount | 12 | 17 |
Accumulated amortization | $ (7) | $ (6) |
Goodwill, Purchased Technolog68
Goodwill, Purchased Technology and Other Intangible Assets (Amortization Expense by Segment) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Oct. 25, 2015 | Oct. 26, 2014 | Oct. 27, 2013 | |
Finite-Lived Intangible Assets [Line Items] | |||
Amortization expense | $ 186 | $ 184 | $ 199 |
Silicon Systems | |||
Finite-Lived Intangible Assets [Line Items] | |||
Amortization expense | 179 | 173 | 172 |
Applied Global Services | |||
Finite-Lived Intangible Assets [Line Items] | |||
Amortization expense | 1 | 3 | 5 |
Display | |||
Finite-Lived Intangible Assets [Line Items] | |||
Amortization expense | 2 | 2 | 6 |
Energy and Environmental Solutions | |||
Finite-Lived Intangible Assets [Line Items] | |||
Amortization expense | $ 4 | $ 6 | $ 16 |
Goodwill, Purchased Technolog69
Goodwill, Purchased Technology and Other Intangible Assets (Amortization Expense by Category) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Oct. 25, 2015 | Oct. 26, 2014 | Oct. 27, 2013 | |
Indefinite Lived Intangible Assets By Category [Abstract] | |||
Amortization expense | $ 186 | $ 184 | $ 199 |
Cost of products sold | |||
Indefinite Lived Intangible Assets By Category [Abstract] | |||
Amortization expense | 163 | 159 | 166 |
Research, development and engineering | |||
Indefinite Lived Intangible Assets By Category [Abstract] | |||
Amortization expense | 1 | 1 | 1 |
Marketing and selling | |||
Indefinite Lived Intangible Assets By Category [Abstract] | |||
Amortization expense | 20 | 21 | 26 |
General and administrative | |||
Indefinite Lived Intangible Assets By Category [Abstract] | |||
Amortization expense | $ 2 | $ 3 | $ 6 |
Goodwill, Purchased Technolog70
Goodwill, Purchased Technology and Other Intangible Assets (Future Estimated Amortization Expense) (Details) - USD ($) $ in Millions | Oct. 25, 2015 | Oct. 26, 2014 |
Future estimated amortization expense | ||
2,016 | $ 189 | |
2,017 | 186 | |
2,018 | 185 | |
2,019 | 44 | |
2,020 | 39 | |
Thereafter | 94 | |
Carrying amount | $ 737 | $ 824 |
Borrowing Facilities and Debt71
Borrowing Facilities and Debt (Narrative) (Details) - USD ($) | 1 Months Ended | ||||
Nov. 30, 2015 | Oct. 25, 2015 | Sep. 30, 2015 | Oct. 26, 2014 | Oct. 30, 2011 | |
Line of Credit Facility [Line Items] | |||||
Amount outstanding | $ 0 | ||||
Commercial paper program amount | $ 1,500,000,000 | ||||
Total short-term debt | 1,200,000,000 | $ 0 | |||
Long-term debt | 3,350,000,000 | 1,950,000,000 | |||
Long-term debt | 3,342,000,000 | 1,947,000,000 | |||
Senior Notes | |||||
Line of Credit Facility [Line Items] | |||||
Long-term debt | $ 1,800,000,000 | 1,950,000,000 | |||
Total unamortized discount | (8,000,000) | (3,000,000) | |||
Long-term debt | 1,947,000,000 | ||||
Other debt | |||||
Line of Credit Facility [Line Items] | |||||
Other debt | 800,000,000 | 0 | |||
Commercial Paper | |||||
Line of Credit Facility [Line Items] | |||||
Total short-term debt | 0 | $ 0 | |||
Revolving Credit | |||||
Line of Credit Facility [Line Items] | |||||
Available revolving credit agreement | 1,500,000,000 | ||||
Foreign Line of Credit | |||||
Line of Credit Facility [Line Items] | |||||
Available revolving credit agreement | $ 67,000,000 | ||||
2.650% Senior Notes Due 2016 | Senior Notes | |||||
Line of Credit Facility [Line Items] | |||||
Stated interest rate | 2.65% | 2.65% | |||
Long-term debt | $ 0 | $ 400,000,000 | |||
2.650% Senior Notes Due 2016 | Senior Notes | |||||
Line of Credit Facility [Line Items] | |||||
Short-term debt | $ 400,000,000 | $ 0 | |||
2.650% Senior Notes Due 2016 | Senior Notes | Subsequent Event | |||||
Line of Credit Facility [Line Items] | |||||
Short-term debt | $ 400,000,000 | ||||
Repurchase amount | 405,000,000 | ||||
Loss on repurchase of debt instrument | $ 5,000,000 |
Borrowing Facilities and Debt72
Borrowing Facilities and Debt (Debt Outstanding) (Details) - USD ($) $ in Millions | Oct. 25, 2015 | Sep. 30, 2015 | Oct. 26, 2014 |
Short-term debt: | |||
Total short-term debt | $ 1,200 | $ 0 | |
Long-term debt: | |||
Principal amount | 3,350 | 1,950 | |
Long-term Debt | 3,342 | 1,947 | |
Total debt | 4,542 | 1,947 | |
Senior Notes | 2.650% Senior Notes Due 2016 | |||
Short-term debt: | |||
Short-term debt | 400 | 0 | |
Other debt | |||
Short-term debt: | |||
Other debt | $ 800 | 0 | |
Other debt | Minimum | |||
Long-term debt: | |||
Effective Interest Rate | 1.00% | ||
Other debt | Maximum | |||
Long-term debt: | |||
Effective Interest Rate | 1.25% | ||
Senior Notes | |||
Long-term debt: | |||
Principal amount | $ 1,800 | 1,950 | |
Total unamortized discount | $ (8) | (3) | |
Senior Notes | 2.650% Senior Notes Due 2016 | |||
Long-term debt: | |||
Principal amount | $ 0 | $ 400 | |
Effective Interest Rate | 2.666% | 2.666% | |
Stated interest rate | 2.65% | 2.65% | |
Senior Notes | 7.125% Senior Notes Due 2017 | |||
Long-term debt: | |||
Principal amount | $ 200 | $ 200 | |
Effective Interest Rate | 7.19% | 7.19% | |
Stated interest rate | 7.125% | 7.125% | |
Senior Notes | 2.625% Senior Notes Due 2020 | |||
Long-term debt: | |||
Principal amount | $ 600 | $ 0 | |
Effective Interest Rate | 2.64% | ||
Stated interest rate | 2.65% | ||
Senior Notes | 4.300% Senior Notes Due 2021 | |||
Long-term debt: | |||
Principal amount | $ 750 | $ 750 | |
Effective Interest Rate | 4.326% | 4.326% | |
Stated interest rate | 4.30% | 4.30% | |
Senior Notes | 3.900% Senior Notes Due 2025 | |||
Long-term debt: | |||
Principal amount | $ 700 | $ 0 | |
Effective Interest Rate | 3.944% | ||
Stated interest rate | 3.90% | ||
Senior Notes | 5.100% Senior Notes Due 2035 | |||
Long-term debt: | |||
Principal amount | $ 500 | 0 | |
Effective Interest Rate | 5.127% | ||
Stated interest rate | 5.10% | ||
Senior Notes | 5.850% Senior Notes Due 2041 | |||
Long-term debt: | |||
Principal amount | $ 600 | $ 600 | |
Effective Interest Rate | 5.879% | 5.879% | |
Stated interest rate | 5.85% | 5.85% |
Restructuring Charges and Ass73
Restructuring Charges and Asset Impairments (Major Components of the Restructuring and Asset Impairment Charges) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Oct. 25, 2015 | Oct. 26, 2014 | Oct. 27, 2013 | |
Restructuring Cost and Reserve [Line Items] | |||
Restructuring charges and asset impairments | $ 14 | $ 5 | $ 63 |
2012 Global Restructuring Plan | Severance and other employee-related costs | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring charges and asset impairments | (1) | 5 | 39 |
2012 EES Restructuring Plan | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring charges and asset impairments | 26 | ||
2012 EES Restructuring Plan | Severance and other employee-related costs | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring charges and asset impairments | 0 | 0 | 8 |
2012 EES Restructuring Plan | Contract cancellation and other costs | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring charges and asset impairments | (2) | 0 | 6 |
2012 EES Restructuring Plan | Asset Impairments | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring charges and asset impairments | 0 | 0 | 12 |
Others | Severance and other employee-related costs | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring charges and asset impairments | 9 | 0 | 2 |
Others | Contract cancellation and other costs | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring charges and asset impairments | 1 | 0 | (4) |
Others | Asset Impairments | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring charges and asset impairments | $ 7 | $ 0 | $ 0 |
Restructuring Charges and Ass74
Restructuring Charges and Asset Impairments (Restructuring and Asset Impairment Charges) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Oct. 25, 2015 | Oct. 26, 2014 | Oct. 27, 2013 | |
Restructuring Cost and Reserve [Line Items] | |||
Restructuring charges and asset impairments | $ 14 | $ 5 | $ 63 |
Silicon Systems | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring charges and asset impairments | 0 | 0 | 1 |
Applied Global Services | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring charges and asset impairments | 0 | 0 | 2 |
Energy and Environmental Solutions | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring charges and asset impairments | 15 | 0 | 25 |
Corporate Unallocated | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring charges and asset impairments | $ (1) | $ 5 | $ 35 |
Restructuring Charges and Ass75
Restructuring Charges and Asset Impairments (Narrative) (Details) $ in Millions | Oct. 03, 2012positions | Oct. 25, 2015USD ($) | Oct. 26, 2014USD ($) | Oct. 27, 2013USD ($) | Oct. 27, 2013USD ($)positions | Oct. 26, 2015USD ($) | Oct. 28, 2012USD ($) |
Restructuring Cost and Reserve [Line Items] | |||||||
Restructuring charges and asset impairments | $ 14 | $ 5 | $ 63 | ||||
Restructuring charges and asset impairments | 14 | 5 | 63 | ||||
Restructuring reserve | 6 | 9 | 39 | $ 39 | $ 133 | ||
2012 Global Restructuring Plan | |||||||
Restructuring Cost and Reserve [Line Items] | |||||||
Number of positions eliminated | positions | 1,300 | ||||||
2012 Global Restructuring Plan | Severance and other employee-related costs | |||||||
Restructuring Cost and Reserve [Line Items] | |||||||
Cost incurred to date | 150 | ||||||
Restructuring charges and asset impairments | 5 | 39 | |||||
Restructuring charges and asset impairments | (1) | 5 | 39 | ||||
Restructuring reserve | 1 | 4 | 26 | $ 26 | 106 | ||
2012 EES Restructuring Plan | |||||||
Restructuring Cost and Reserve [Line Items] | |||||||
Cost incurred to date | 87 | ||||||
Restructuring charges and asset impairments | (2) | ||||||
Restructuring charges and asset impairments | 26 | ||||||
2012 EES Restructuring Plan | Maximum | |||||||
Restructuring Cost and Reserve [Line Items] | |||||||
Number of positions eliminated | positions | 300 | ||||||
2012 EES Restructuring Plan | Severance and other employee-related costs | |||||||
Restructuring Cost and Reserve [Line Items] | |||||||
Restructuring charges and asset impairments | 0 | 0 | 8 | ||||
Restructuring reserve | 0 | 0 | 5 | $ 5 | 16 | ||
2012 EES Restructuring Plan | Inventory-related Charges | |||||||
Restructuring Cost and Reserve [Line Items] | |||||||
Cost incurred to date | 13 | ||||||
Others | Severance and other employee-related costs | |||||||
Restructuring Cost and Reserve [Line Items] | |||||||
Restructuring charges and asset impairments | 2 | ||||||
Restructuring charges and asset impairments | 9 | 0 | 2 | ||||
Restructuring reserve | 3 | 0 | 2 | $ 2 | $ 5 | ||
Others | Severance and other employee-related costs | Forecast | |||||||
Restructuring Cost and Reserve [Line Items] | |||||||
Restructuring reserve | $ 0 | ||||||
Energy and Environmental Solutions | |||||||
Restructuring Cost and Reserve [Line Items] | |||||||
Restructuring charges and asset impairments | 15 | $ 0 | $ 25 | ||||
Energy and Environmental Solutions | Others | |||||||
Restructuring Cost and Reserve [Line Items] | |||||||
Restructuring reserve | 4 | ||||||
Energy and Environmental Solutions | Others | Severance and other employee-related costs | |||||||
Restructuring Cost and Reserve [Line Items] | |||||||
Restructuring reserve | 3 | ||||||
Energy and Environmental Solutions | Others | Inventory-related Charges | |||||||
Restructuring Cost and Reserve [Line Items] | |||||||
Restructuring charges and asset impairments | 35 | ||||||
Energy and Environmental Solutions | Others | Restructuring charge | |||||||
Restructuring Cost and Reserve [Line Items] | |||||||
Restructuring charges and asset impairments | 17 | ||||||
Energy and Environmental Solutions | Others | Restructuring charge | Minimum | |||||||
Restructuring Cost and Reserve [Line Items] | |||||||
Restructuring reserve | 45 | ||||||
Energy and Environmental Solutions | Others | Restructuring charge | Maximum | |||||||
Restructuring Cost and Reserve [Line Items] | |||||||
Restructuring reserve | $ 55 |
Restructuring Charges and Ass76
Restructuring Charges and Asset Impairments (Changes in Restructuring Reserves) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Oct. 25, 2015 | Oct. 26, 2014 | Oct. 27, 2013 | |
Restructuring Reserve [Roll Forward] | |||
Beginning Balance | $ 9 | $ 39 | $ 133 |
Provision for restructuring reserves | 9 | 7 | 52 |
Consumption of reserves | (9) | (35) | (136) |
Adjustment of restructuring reserves | (3) | (2) | (10) |
Ending Balance | 6 | 9 | 39 |
2012 Global Restructuring Plan | Severance and other employee-related costs | |||
Restructuring Reserve [Roll Forward] | |||
Beginning Balance | 4 | 26 | 106 |
Provision for restructuring reserves | 0 | 7 | 35 |
Consumption of reserves | (2) | (27) | (111) |
Adjustment of restructuring reserves | (1) | (2) | (4) |
Ending Balance | 1 | 4 | 26 |
2012 EES Restructuring Plan | Severance and other employee-related costs | |||
Restructuring Reserve [Roll Forward] | |||
Beginning Balance | 0 | 5 | 16 |
Provision for restructuring reserves | 0 | 0 | 7 |
Consumption of reserves | 0 | (5) | (18) |
Adjustment of restructuring reserves | 0 | 0 | 0 |
Ending Balance | 0 | 0 | 5 |
2012 EES Restructuring Plan | Contract cancellation and other costs | |||
Restructuring Reserve [Roll Forward] | |||
Beginning Balance | 4 | 5 | 1 |
Provision for restructuring reserves | 0 | 0 | 8 |
Consumption of reserves | (1) | (1) | (2) |
Adjustment of restructuring reserves | (2) | 0 | (2) |
Ending Balance | 1 | 4 | 5 |
Others | Severance and other employee-related costs | |||
Restructuring Reserve [Roll Forward] | |||
Beginning Balance | 0 | 2 | 5 |
Provision for restructuring reserves | 8 | 0 | 2 |
Consumption of reserves | (5) | (2) | (5) |
Adjustment of restructuring reserves | 0 | 0 | 0 |
Ending Balance | 3 | 0 | 2 |
Others | Contract cancellation and other costs | |||
Restructuring Reserve [Roll Forward] | |||
Beginning Balance | 1 | 1 | 5 |
Provision for restructuring reserves | 1 | 0 | 0 |
Consumption of reserves | (1) | 0 | 0 |
Adjustment of restructuring reserves | 0 | 0 | (4) |
Ending Balance | $ 1 | $ 1 | $ 1 |
Stockholders' Equity, Compreh77
Stockholders' Equity, Comprehensive Income and Share-Based Compensation (Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Oct. 25, 2015 | Oct. 26, 2014 | Oct. 27, 2013 | |
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | |||
Beginning balance | $ (76) | $ (38) | |
Other comprehensive income (loss) before reclassifications | (25) | (26) | |
Amounts reclassified out of AOCI | 9 | (12) | |
Other comprehensive income (loss), net of tax | (16) | (38) | $ 23 |
Ending balance | (92) | (76) | (38) |
Unrealized Gain on Investments, Net | |||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | |||
Beginning balance | 24 | 25 | |
Other comprehensive income (loss) before reclassifications | (11) | 8 | |
Amounts reclassified out of AOCI | 1 | (9) | |
Other comprehensive income (loss), net of tax | (10) | (1) | |
Ending balance | 14 | 24 | 25 |
Unrealized Gain on Derivative Instruments Qualifying as Cash Flow Hedges | |||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | |||
Beginning balance | 0 | 2 | |
Other comprehensive income (loss) before reclassifications | (9) | 4 | |
Amounts reclassified out of AOCI | (6) | (6) | |
Other comprehensive income (loss), net of tax | (15) | (2) | |
Ending balance | (15) | 0 | 2 |
Defined and Postretirement Benefit Plans | |||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | |||
Beginning balance | (105) | (72) | |
Other comprehensive income (loss) before reclassifications | (5) | (36) | |
Amounts reclassified out of AOCI | 5 | 3 | |
Other comprehensive income (loss), net of tax | 0 | (33) | |
Ending balance | (105) | (105) | (72) |
Cumulative Translation Adjustments | |||
Accumulated Other Comprehensive Income (Loss), Net of Tax [Roll Forward] | |||
Beginning balance | 5 | 7 | |
Other comprehensive income (loss) before reclassifications | 0 | (2) | |
Amounts reclassified out of AOCI | 9 | 0 | |
Other comprehensive income (loss), net of tax | 9 | (2) | |
Ending balance | $ 14 | $ 5 | $ 7 |
Stockholders' Equity, Compreh78
Stockholders' Equity, Comprehensive Income and Share-Based Compensation (Narrative) (Details) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Oct. 27, 2013$ / shares | Jul. 28, 2013$ / shares | Oct. 25, 2015USD ($)Plan$ / sharesshares | Oct. 26, 2014USD ($)$ / sharesshares | Oct. 27, 2013USD ($)$ / sharesshares | Apr. 26, 2015USD ($) | |
Stock Repurchase Program | ||||||
Authorized amount | $ | $ 3,000,000,000 | |||||
Period in force | 3 years | |||||
Remaining authorized repurchase amount | $ | $ 1,700,000,000 | |||||
Shares of common stock repurchased (in shares) | 76,000,000 | 0 | 18,000,000 | |||
Dividends | ||||||
Cash dividend declared (usd per share) | $ / shares | $ 0.09 | $ 0.10 | $ 0.10 | |||
Payments of dividends | $ | $ 487,000,000 | $ 485,000,000 | $ 456,000,000 | |||
Share-based Compensation | ||||||
Number of employee stock purchase plans | Plan | 2 | |||||
Stock Options | ||||||
Options granted | 0 | 0 | 1,000,000 | |||
First Quarter Dividend | ||||||
Dividends | ||||||
Cash dividend declared (usd per share) | $ / shares | $ 0.10 | $ 0.10 | $ 0.09 | |||
Second Quarter Dividend | ||||||
Dividends | ||||||
Cash dividend declared (usd per share) | $ / shares | 0.10 | 0.10 | 0.10 | |||
Third Quarter Dividend | ||||||
Dividends | ||||||
Cash dividend declared (usd per share) | $ / shares | 0.10 | 0.10 | 0.10 | |||
Fourth Quarter Dividend | ||||||
Dividends | ||||||
Cash dividend declared (usd per share) | $ / shares | $ 0.10 | $ 0.10 | $ 0.10 | |||
Employee Stock Purchase Plan | ||||||
Share-based Compensation | ||||||
Number of shares available for grant | 29,000,000 | |||||
Employee Stock Purchase Plans | ||||||
Purchase period | 6 months | |||||
Number of shares issued under the ESPP | 5,000,000 | 6,000,000 | 7,000,000 | |||
Employee Stock | ||||||
Share-based Compensation | ||||||
Total unrecognized compensation expense | $ | $ 262,000,000 | |||||
Weighted average period for unrecognized compensation expense to be recognized | 2 years 5 months | |||||
Number of shares available for grant | 126,000,000 | |||||
Stock Options | ||||||
Stock Options | ||||||
Stock options scheduled to expire | 7 years | |||||
Options granted | 0 | |||||
Stock Options | Minimum | ||||||
Stock Options | ||||||
Stock options scheduled to be vested | 3 years | |||||
Stock Options | Maximum | ||||||
Stock Options | ||||||
Stock options scheduled to be vested | 4 years | |||||
Restricted Stock Awards | ||||||
Restricted Stock Units, Restricted Stock, Performance Shares and Performance Units | ||||||
Tax benefit realized | $ | $ 103,000,000 | $ 61,000,000 | $ 42,000,000 | |||
Restricted Stock | ||||||
Restricted Stock Units, Restricted Stock, Performance Shares and Performance Units | ||||||
Award conversion ratio to common stock | 1 | |||||
Performance Shares/Performance Units | ||||||
Restricted Stock Units, Restricted Stock, Performance Shares and Performance Units | ||||||
Additional performance-based awards expected | 1,000,000 | |||||
Award conversion ratio to common stock | 1 | |||||
Restricted Stock Units, Restricted Stock, Performance Shares and Performance Units | ||||||
Stock Options | ||||||
Stock options scheduled to be vested | 4 years | |||||
Restricted Stock Units, Restricted Stock, Performance Shares and Performance Units | Minimum | Certain Executive Officers | ||||||
Stock Options | ||||||
Stock options scheduled to be vested | 3 years | |||||
Restricted Stock Units, Restricted Stock, Performance Shares and Performance Units | Maximum | Certain Executive Officers | ||||||
Stock Options | ||||||
Stock options scheduled to be vested | 4 years | |||||
Employee Stock | ||||||
Employee Stock Purchase Plans | ||||||
Purchase price of common stock, percent | 85.00% |
Stockholders' Equity, Compreh79
Stockholders' Equity, Comprehensive Income and Share-Based Compensation (Stock Repurchases) (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 12 Months Ended | ||
Oct. 25, 2015 | Oct. 26, 2014 | Oct. 27, 2013 | |
Equity [Abstract] | |||
Shares of common stock repurchased (in shares) | 76 | 0 | 18 |
Cost of stock repurchased | $ 1,325 | $ 0 | $ 245 |
Average price paid per share (in dollars per share) | $ 17.33 | $ 0 | $ 13.60 |
Stockholders' Equity, Compreh80
Stockholders' Equity, Comprehensive Income and Share-Based Compensation (Share-based Compensation) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Oct. 25, 2015 | Oct. 26, 2014 | Oct. 27, 2013 | |
Total share-based compensation and related tax benefits | |||
Share-based compensation | $ 187 | $ 177 | $ 162 |
Tax benefit recognized | $ 52 | $ 50 | $ 45 |
Stockholders' Equity, Compreh81
Stockholders' Equity, Comprehensive Income and Share-Based Compensation (Effect of Share-based Compensation) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Oct. 25, 2015 | Oct. 26, 2014 | Oct. 27, 2013 | |
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | |||
Total share-based compensation | $ 187 | $ 177 | $ 162 |
Cost of products sold | |||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | |||
Total share-based compensation | 57 | 53 | 50 |
Research, development and engineering | |||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | |||
Total share-based compensation | 69 | 66 | 53 |
Marketing and selling | |||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | |||
Total share-based compensation | 26 | 23 | 20 |
General and administrative | |||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | |||
Total share-based compensation | 35 | 35 | 34 |
Restructuring charge | |||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | |||
Total share-based compensation | $ 0 | $ 0 | $ 5 |
Stockholders' Equity, Compreh82
Stockholders' Equity, Comprehensive Income and Share-Based Compensation (Weighted Average Assumptions used for Stock Options Granted and Assumed) (Details) - Stock Options | 12 Months Ended |
Oct. 27, 2013 | |
Weighted Average Assumptions Used For Stock Options Granted | |
Dividend yield | 2.70% |
Expected volatility | 29.50% |
Risk-free interest rate | 1.44% |
Expected life (in years) | 4 years 6 months |
Stockholders' Equity, Compreh83
Stockholders' Equity, Comprehensive Income and Share-Based Compensation (Stock Options) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Oct. 25, 2015 | Oct. 26, 2014 | Oct. 27, 2013 | |
Equity [Abstract] | |||
Aggregate intrinsic value of outstanding stock options | $ 6 | $ 19 | $ 49 |
Total intrinsic value of stock options exercised | 6 | 39 | 63 |
Total fair value of stock options vested | 1 | 1 | 4 |
Cash received from stock option exercises | 3 | 29 | 88 |
Actual tax benefit realized from options exercised | $ 2 | $ 12 | $ 19 |
Stockholders' Equity, Compreh84
Stockholders' Equity, Comprehensive Income and Share-Based Compensation (Stock Option Activity) (Details) - $ / shares shares in Millions | 12 Months Ended | ||
Oct. 25, 2015 | Oct. 26, 2014 | Oct. 27, 2013 | |
Shares | |||
Beginning Balance | 2 | 6 | 21 |
Granted and assumed in Varian acquisition | 0 | 0 | 1 |
Exercised | (1) | (4) | (11) |
Canceled and forfeited | 0 | 0 | (5) |
Ending Balance | 1 | 2 | 6 |
Exercisable, Shares | 1 | 1 | 5 |
Weighted Average Exercise Price | |||
Beginning Balance (in dollars per share) | $ 10.87 | $ 9.12 | $ 10.53 |
Granted and assumed in Varian acquisition (in dollars per share) | 0 | 0 | 15.06 |
Exercised (in dollars per share) | 5.90 | 7.85 | 8.16 |
Canceled and forfeited (in dollars per share) | 0 | 0 | 17.62 |
Ending Balance (in dollars per share) | 12.45 | 10.87 | 9.12 |
Exercisable, Weighted Average Exercise Price (in dollars per share) | $ 10.98 | $ 7.97 | $ 7.90 |
Stockholders' Equity, Compreh85
Stockholders' Equity, Comprehensive Income and Share-Based Compensation (Exercise Price) (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 12 Months Ended | ||
Oct. 25, 2015 | Oct. 26, 2014 | Oct. 27, 2013 | |
Options Outstanding | |||
Number of Shares | 1 | ||
Options exercisable and expected to become exercisable, Number of Shares | 1 | ||
Weighted Average Exercise Price (in dollar per share) | $ 12.45 | ||
Options exercisable and expected to become exercisable, Weighted Average Exercise Price (in dollars per share) | $ 12.45 | ||
Weighted Average Remaining Contractual Life | 3 years 9 months 15 days | ||
Options exercisable and expected to become exercisable, Weighted Average Remaining Contractual Life | 3 years 9 months 15 days | ||
Aggregate Intrinsic Value | $ 6 | $ 19 | $ 49 |
Options exercisable and expected to become exercisable, Aggregate Intrinsic Value | $ 6 | ||
Options Exercisable | |||
Number of Shares | 1 | ||
Weighted Average Exercise Price (in dollar per share) | $ 10.98 | ||
Aggregate Intrinsic Value | $ 5 | ||
Range $3.36 - $9.99 | |||
Options outstanding and exercisable | |||
Exercise price range, lower range limit (in dollar per share) | $ 3.36 | ||
Exercise price range, upper range limit (in dollar per share) | $ 9.99 | ||
Options Outstanding | |||
Number of Shares | 0 | ||
Weighted Average Exercise Price (in dollar per share) | $ 5.58 | ||
Weighted Average Remaining Contractual Life | 1 year 1 month 13 days | ||
Aggregate Intrinsic Value | $ 4 | ||
Options Exercisable | |||
Number of Shares | 0 | ||
Weighted Average Exercise Price (in dollar per share) | $ 5.58 | ||
Aggregate Intrinsic Value | $ 4 | ||
Range $10.00 - $15.06 | |||
Options outstanding and exercisable | |||
Exercise price range, lower range limit (in dollar per share) | $ 10 | ||
Exercise price range, upper range limit (in dollar per share) | $ 15.06 | ||
Options Outstanding | |||
Number of Shares | 1 | ||
Weighted Average Exercise Price (in dollar per share) | $ 15.03 | ||
Weighted Average Remaining Contractual Life | 4 years 9 months 18 days | ||
Aggregate Intrinsic Value | $ 2 | ||
Options Exercisable | |||
Number of Shares | 1 | ||
Weighted Average Exercise Price (in dollar per share) | $ 15 | ||
Aggregate Intrinsic Value | $ 1 |
Stockholders' Equity, Compreh86
Stockholders' Equity, Comprehensive Income and Share-Based Compensation (Restricted Stock Units, Restricted Stock, Performance Shares and Performance Units (Details) - Restricted Stock Units, Restricted Stock, Performance Shares and Performance Units - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 12 Months Ended | |||
Oct. 25, 2015 | Oct. 26, 2014 | Oct. 27, 2013 | Oct. 28, 2012 | |
Shares | ||||
Beginning Balance | 33 | 38 | 36 | |
Granted | 10 | 11 | 19 | |
Vested | (15) | (13) | (11) | |
Canceled | (1) | (3) | (6) | |
Ending Balance | 27 | 33 | 38 | 36 |
Non-vested restricted stock units, restricted stock, performance shares and performance units expected to vest | 24 | |||
Weighted Average Grant Date Fair Value | ||||
Beginning of Period (in dollars per share) | $ 12.59 | $ 11.11 | $ 11.53 | |
Granted (in dollars per share) | 22.60 | 16.58 | 10.55 | |
Vested (in dollars per share) | 12.04 | 11.13 | 11.44 | |
Canceled (in dollars per share) | 14.98 | 11.72 | 11.28 | |
Ending Balance (in dollars per share) | 16.41 | $ 12.59 | $ 11.11 | $ 11.53 |
Non-vested restricted stock units, restricted stock, performance shares and performance units expected to vest (in dollars per share) | $ 15.93 | |||
Weighted Average Remaining Contractual Term | ||||
Weighted average remaining contractual term | 2 years 2 months | 2 years 3 months 18 days | 2 years 4 months 25 days | 2 years 7 months 6 days |
Non-vested restricted stock units, restricted stock, performance shares and performance units expected to vest, Weighted Average Remaining Contractual Term | 2 years | |||
Aggregate Intrinsic Value | ||||
End of the period | $ 440 | $ 698 | $ 662 | $ 376 |
Non-vested restricted stock units, restricted stock, performance shares and performance units expected to vest, Aggregate Intrinsic Value | $ 402 |
Stockholders' Equity, Compreh87
Stockholders' Equity, Comprehensive Income and Share-Based Compensation (ESPP Fair Value Assumptions) (Details) - Employee Stock Purchase Plan - $ / shares | 12 Months Ended | ||
Oct. 25, 2015 | Oct. 26, 2014 | Oct. 27, 2013 | |
Weighted Average Assumptions Used for ESPP Granted | |||
Dividend yield | 2.20% | 1.96% | 2.80% |
Expected volatility | 31.80% | 26.30% | 24.80% |
Risk-free interest rate | 0.19% | 0.06% | 0.09% |
Expected life (in years) | 6 months | 6 months | 6 months |
Weighted Average Estimated Fair Value Of Purchase Rights Under Espp | $ 4.55 | $ 4.56 | $ 3.08 |
Employee Benefit Plans (Narrati
Employee Benefit Plans (Narrative) (Details) $ in Millions | 12 Months Ended | ||
Oct. 25, 2015USD ($)Plan | Oct. 26, 2014USD ($) | Oct. 27, 2013USD ($) | |
Employee Bonus Plans | |||
Charges to expense under Employee bonus plans | $ 307 | $ 290 | $ 269 |
Defined Benefit Pension Plans of Foreign Subsidiaries and Other Post-Retirement Benefits | |||
Liability under pension and other post retirement plan | 206 | 225 | 202 |
Company contributions expected for next fiscal year | $ 14 | ||
Executive Deferred Compensation Plans | |||
Number of unfunded plans | Plan | 2 | ||
Executive Deferred Compensation Plans | |||
Executive Deferred Compensation Plans | |||
Amounts payable under EDCP | $ 38 | 40 | |
Executive Deferred Compensation Plans | Accounts Payable and Accrued Expenses | |||
Executive Deferred Compensation Plans | |||
Amounts payable under EDCP | 35 | ||
Executive Deferred Compensation Plans | Other Liabilities | |||
Executive Deferred Compensation Plans | |||
Amounts payable under EDCP | 5 | ||
Other Postretirement Benefit Plans, Defined Benefit | |||
Defined Benefit Pension Plans of Foreign Subsidiaries and Other Post-Retirement Benefits | |||
Minimum age limit for medical and vision benefits | 55 years | ||
Minimum years of service plus ages for medical and vision benefits | 65 years | ||
Liability under pension and other post retirement plan | $ 21 | 34 | |
Savings and Retirement Plan | |||
Employee Savings and Retirement Plan | |||
Employer matching contribution, percent of match | 100.00% | ||
Employer matching contribution, percent of employees' gross pay | 3.00% | ||
Employer matching contribution, percent of match, second tier | 50.00% | ||
Percentage vested in matching contribution account for participants employed after January 1, 2010 | 100.00% | ||
401(K) Matching contributions | $ 35 | 29 | 29 |
401(K) Matching contributions forfeited | $ 1 | $ 1 | $ 1 |
Savings and Retirement Plan | Minimum | |||
Employee Savings and Retirement Plan | |||
Employer matching contribution, percent of employees' gross pay, second tier | 4.00% | ||
Savings and Retirement Plan | Maximum | |||
Employee Savings and Retirement Plan | |||
Employer matching contribution, percent of employees' gross pay, second tier | 6.00% |
Employee Benefit Plans (Benefit
Employee Benefit Plans (Benefit Obligations and Plan Assets) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Oct. 25, 2015 | Oct. 26, 2014 | Oct. 27, 2013 | |
Change in projected benefit obligation | |||
Beginning projected benefit obligation | $ 479 | $ 445 | $ 434 |
Service cost | 15 | 17 | 20 |
Interest cost | 13 | 17 | 15 |
Plan participants’ contributions | 1 | 1 | 1 |
Actuarial (gain) loss | 12 | 62 | (16) |
Curtailments, settlements and special termination benefits | (1) | (26) | (8) |
Foreign currency exchange rate changes | (39) | (22) | 10 |
Benefits paid | (9) | (12) | (10) |
Plan amendments and business combinations | 0 | (3) | (1) |
Ending projected benefit obligation | 471 | 479 | 445 |
Ending accumulated benefit obligation | 434 | 446 | 409 |
Change in plan assets | |||
Beginning fair value of plan assets | 268 | 248 | 214 |
Return on plan assets | 19 | 20 | 18 |
Employer contributions | 21 | 48 | 24 |
Plan participants’ contributions | 1 | 1 | 1 |
Foreign currency exchange rate changes | (18) | (11) | 8 |
Divestitures, settlements and business combinations | (1) | (26) | (7) |
Benefits paid | (9) | (12) | (10) |
Ending fair value of plan assets | 281 | 268 | 248 |
Funded status | (190) | (211) | (197) |
Amounts recognized in the consolidated balance sheets | |||
Noncurrent asset | 19 | 17 | 9 |
Current liability | (3) | (3) | (4) |
Noncurrent liability | (206) | (225) | (202) |
Total | (190) | (211) | (197) |
Estimated amortization from accumulated other comprehensive loss into net periodic benefit cost over the next fiscal period | |||
Actuarial loss | 6 | 6 | 4 |
Prior service cost credit | (1) | 0 | 0 |
Total | 5 | 6 | 4 |
Amounts recognized in accumulated other comprehensive loss | |||
Net actuarial loss | 135 | 134 | 91 |
Prior service cost (credit) | 0 | (1) | 2 |
Total | 135 | 133 | 93 |
Plans with projected benefit obligations in excess of plan assets | |||
Projected benefit obligation | 308 | 326 | 438 |
Fair value of plan assets | 98 | 98 | 233 |
Plans with accumulated benefit obligations in excess of plan assets | |||
Accumulated benefit obligation | 274 | 297 | 269 |
Fair value of plan assets | $ 98 | $ 98 | $ 99 |
Minimum | |||
Range of assumptions to determine benefit obligations | |||
Discount rate | 0.90% | 1.00% | 1.10% |
Rate of compensation increase | 1.90% | 2.00% | 2.00% |
Maximum | |||
Range of assumptions to determine benefit obligations | |||
Discount rate | 4.40% | 4.40% | 4.50% |
Rate of compensation increase | 3.60% | 4.00% | 4.70% |
Employee Benefit Plans Employee
Employee Benefit Plans Employee Benefit Plans (Plan Assets Allocation) (Details) | 12 Months Ended | |
Oct. 25, 2015 | Oct. 26, 2014 | |
Equity securities | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Plan assets — allocation | 39.00% | 39.00% |
Debt securities | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Plan assets — allocation | 42.00% | 38.00% |
Insurance contracts | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Plan assets — allocation | 14.00% | 15.00% |
Other Investments | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Plan assets — allocation | 4.00% | 5.00% |
Cash | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Plan assets — allocation | 1.00% | 3.00% |
Employee Benefit Plans (Fair Va
Employee Benefit Plans (Fair Value of Plan Assets) (Details) - USD ($) $ in Millions | Oct. 25, 2015 | Oct. 26, 2014 | Oct. 27, 2013 | Oct. 28, 2012 |
Defined Benefit Plan Disclosure [Line Items] | ||||
Fair value of plan of assets | $ 281 | $ 268 | $ 248 | $ 214 |
Level 1 | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Fair value of plan of assets | 52 | 55 | ||
Level 2 | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Fair value of plan of assets | 189 | 172 | ||
Level 3 | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Fair value of plan of assets | 40 | 41 | $ 47 | |
Equity securities | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Fair value of plan of assets | 108 | 104 | ||
Equity securities | Level 1 | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Fair value of plan of assets | 42 | 38 | ||
Equity securities | Level 2 | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Fair value of plan of assets | 66 | 66 | ||
Equity securities | Level 3 | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Fair value of plan of assets | 0 | 0 | ||
Debt securities | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Fair value of plan of assets | 119 | 102 | ||
Debt securities | Level 1 | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Fair value of plan of assets | 8 | 8 | ||
Debt securities | Level 2 | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Fair value of plan of assets | 111 | 94 | ||
Debt securities | Level 3 | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Fair value of plan of assets | 0 | 0 | ||
Insurance contracts | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Fair value of plan of assets | 40 | 41 | ||
Insurance contracts | Level 1 | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Fair value of plan of assets | 0 | 0 | ||
Insurance contracts | Level 2 | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Fair value of plan of assets | 0 | 0 | ||
Insurance contracts | Level 3 | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Fair value of plan of assets | 40 | 41 | ||
Other Investments | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Fair value of plan of assets | 12 | 12 | ||
Other Investments | Level 1 | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Fair value of plan of assets | 0 | 0 | ||
Other Investments | Level 2 | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Fair value of plan of assets | 12 | 12 | ||
Other Investments | Level 3 | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Fair value of plan of assets | 0 | 0 | ||
Cash | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Fair value of plan of assets | 2 | 9 | ||
Cash | Level 1 | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Fair value of plan of assets | 2 | 9 | ||
Cash | Level 2 | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Fair value of plan of assets | 0 | 0 | ||
Cash | Level 3 | ||||
Defined Benefit Plan Disclosure [Line Items] | ||||
Fair value of plan of assets | $ 0 | $ 0 |
Employee Benefit Plans (Level 3
Employee Benefit Plans (Level 3 Instruments) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Oct. 25, 2015 | Oct. 26, 2014 | Oct. 27, 2013 | |
Change in plan assets | |||
Beginning fair value of plan assets | $ 268 | $ 248 | $ 214 |
Actual return on plan assets: | |||
Currency impact | (18) | (11) | 8 |
Ending fair value of plan assets | 281 | 268 | 248 |
Level 3 | |||
Change in plan assets | |||
Beginning fair value of plan assets | 41 | 47 | |
Actual return on plan assets: | |||
Relating to assets still held at reporting date | 2 | 0 | |
Purchases, sales, settlements, net | 1 | (2) | |
Currency impact | (4) | (4) | |
Ending fair value of plan assets | $ 40 | $ 41 | $ 47 |
Employee Benefit Plans (Net Per
Employee Benefit Plans (Net Periodic Benefit Costs) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Oct. 25, 2015 | Oct. 26, 2014 | Oct. 27, 2013 | |
Components of net periodic benefit cost | |||
Service cost | $ 15 | $ 17 | $ 20 |
Interest cost | 13 | 17 | 15 |
Expected return on plan assets | (15) | (14) | (12) |
Amortization of actuarial loss and prior service credit | 7 | 4 | 6 |
Settlement and curtailment loss | (1) | 3 | 0 |
Net periodic benefit cost | $ 19 | $ 27 | $ 29 |
Weighted average assumptions | |||
Discount rate | 3.00% | 3.68% | 3.46% |
Expected long-term return on assets | 5.62% | 5.64% | 5.38% |
Rate of compensation increase | 2.74% | 3.29% | 3.07% |
Employee Benefit Plans (Future
Employee Benefit Plans (Future Expected Benefit Payments) (Details) $ in Millions | Oct. 25, 2015USD ($) |
Defined Benefit Plan, Estimated Future Benefit Payments [Abstract] | |
2,016 | $ 15 |
2,017 | 12 |
2,018 | 11 |
2,019 | 12 |
2,020 | 12 |
2021-2025 | 72 |
Total | $ 134 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Oct. 25, 2015 | Oct. 26, 2014 | Oct. 27, 2013 | |
Components of income from operations before income taxes | |||
U.S. | $ 629 | $ 612 | $ 194 |
Foreign | 969 | 836 | 156 |
Income before income taxes | 1,598 | 1,448 | 350 |
Current: | |||
U.S. | 134 | 270 | 3 |
Foreign | 199 | 97 | 72 |
State | 18 | 27 | 2 |
Total current provision for income taxes | 351 | 394 | 77 |
Deferred: | |||
U.S. | (194) | (9) | 34 |
Foreign | 69 | (3) | (19) |
State | (5) | (6) | 2 |
Total deferred provision (benefit) for income taxes | (130) | (18) | 17 |
Provision for income taxes | $ 221 | $ 376 | $ 94 |
Reconciliation between the statutory U.S.federal income tax rate to actual effective income tax rate | |||
Tax provision at U.S. statutory rate | 35.00% | 35.00% | 35.00% |
Resolutions from prior years’ income tax filings | (4.90%) | 2.00% | (4.70%) |
Effect of foreign operations taxed at various rates | (16.30%) | (10.90%) | (21.10%) |
State income taxes, net of federal benefit | 0.90% | 1.00% | 0.80% |
Research and other tax credits | (0.20%) | (0.30%) | (5.40%) |
U.S. domestic production deduction | (0.60%) | (1.30%) | (1.00%) |
Acquisition costs | (1.10%) | 0.80% | 0.00% |
Goodwill impairment | 0.00% | 0.00% | 22.50% |
Share-based compensation | 0.80% | 0.40% | 2.20% |
Other | 0.20% | (0.70%) | (1.40%) |
Effective income tax rate | 13.80% | 26.00% | 26.90% |
Deferred tax assets: | |||
Allowance for doubtful accounts | $ 20 | $ 26 | |
Inventory reserves and basis difference | 155 | 128 | |
Installation and warranty reserves | 11 | 18 | |
Accrued liabilities | 106 | 123 | |
Deferred revenue | 17 | 32 | |
Tax credits and net operating losses | 196 | 160 | |
Deferred compensation | 79 | 44 | |
Share-based compensation | 53 | 57 | |
Fixed assets | 0 | 16 | |
Other | 150 | 27 | |
Gross deferred tax assets | 787 | 631 | |
Valuation allowance | (207) | (173) | |
Total deferred tax assets | 580 | 458 | |
Deferred tax liabilities: | |||
Fixed assets | (15) | 0 | |
Intangible assets | (91) | (92) | |
Undistributed foreign earnings | (68) | (87) | |
Foreign exchange | (4) | (12) | |
Total gross deferred tax liabilities | (178) | (191) | |
Net deferred tax assets | 402 | 267 | |
Breakdown between current and non-current net deferred tax assets and liabilities | |||
Current deferred tax asset | 403 | 232 | |
Non-current deferred tax asset | 55 | 67 | |
Non-current deferred tax liability | (56) | (32) | |
Net deferred tax assets | 402 | 267 | |
Reconciliation of gross unrecognized tax benefits | |||
Beginning balance of gross unrecognized tax benefits | 134 | 194 | $ 174 |
Settlements with tax authorities | (16) | (143) | (15) |
Lapses of statutes of limitation | (1) | (2) | (15) |
Increases in tax positions for current year | 43 | 52 | 48 |
Increases in tax positions for prior years | 21 | 42 | 2 |
Decreases in tax positions for prior years | (4) | (9) | 0 |
Ending balance of gross unrecognized tax benefits | $ 177 | $ 134 | $ 194 |
Income Taxes (Valuation Allowan
Income Taxes (Valuation Allowance) (Details) - Valuation Allowance of Deferred Tax Assets - USD ($) $ in Millions | 12 Months Ended | ||
Oct. 25, 2015 | Oct. 26, 2014 | Oct. 27, 2013 | |
Movement in Valuation Allowances and Reserves [Roll Forward] | |||
Beginning balance | $ 173 | $ 116 | $ 46 |
Increases | 40 | 60 | 70 |
Decreases | (6) | (3) | 0 |
Ending balance | $ 207 | $ 173 | $ 116 |
Income Taxes (Narrative) (Detai
Income Taxes (Narrative) (Details) - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | ||
Oct. 25, 2015 | Oct. 26, 2014 | Oct. 27, 2013 | |
Income Tax Examination [Line Items] | |||
Statutory U.S. federal tax rate | 35.00% | 35.00% | 35.00% |
Tax holiday benefit | $ 68 | ||
Tax holiday benefit per diluted share (in dollars per share) | $ 0.06 | ||
Undistributed earnings from foregin subsidiaries | $ 4,100 | ||
Tax credit carryforwards | 179 | ||
Income tax benefits allocated directly to stockholders' equity | 56 | $ 27 | $ 11 |
Income tax penalties and interest expense | 6 | 18 | 1 |
Unrecognized tax benefits that would impact effective tax rate | 167 | 124 | 183 |
Unrecognized tax benefits that would impact adjustment to other tax accounts | 9 | 9 | 10 |
Tax refunds | 12 | 111 | 102 |
Income tax expense (benefit) | 221 | 376 | 94 |
Noncurrent Liabilities | |||
Income Tax Examination [Line Items] | |||
Interest and penalties related to uncertain tax positions | 14 | 25 | 7 |
Internal Revenue Service | |||
Income Tax Examination [Line Items] | |||
Income tax refund | 17 | ||
Income tax expense (benefit) from settlement with tax authorities | (3) | ||
Tax refunds | 31 | ||
Income tax expense (benefit) | (12) | ||
Payments for tax settlements | $ 14 | ||
State and Local Jurisdiction | |||
Income Tax Examination [Line Items] | |||
Operating loss carryforwards | 34 | ||
Foreign Tax Authority | |||
Income Tax Examination [Line Items] | |||
Income tax expense (benefit) from settlement with tax authorities | (10) | ||
Research, carried over until exhausted | State and Local Jurisdiction | |||
Income Tax Examination [Line Items] | |||
Tax credit carryforwards | 143 | ||
Research, carried over the next fifteen years | State and Local Jurisdiction | |||
Income Tax Examination [Line Items] | |||
Tax credit carryforwards | $ 36 | ||
Tax credit carryforward, term | 15 years | ||
SINGAPORE | |||
Income Tax Examination [Line Items] | |||
Foreign statutory income tax rate | 17.00% | ||
ISRAEL | |||
Income Tax Examination [Line Items] | |||
Foreign statutory income tax rate | 26.50% | ||
ITALY | Foreign Tax Authority | |||
Income Tax Examination [Line Items] | |||
Income tax expense (benefit) from settlement with tax authorities | $ 19 | ||
SWITZERLAND | Foreign Tax Authority | |||
Income Tax Examination [Line Items] | |||
Income tax expense (benefit) from settlement with tax authorities | $ 2 | ||
KOREA | Foreign Tax Authority | |||
Income Tax Examination [Line Items] | |||
Income tax refund | $ 18 |
Warranty, Guarantees, Commitm98
Warranty, Guarantees, Commitments and Contingencies (Narrative) (Details) $ in Millions | 12 Months Ended | |||
Oct. 25, 2015USD ($) | Oct. 26, 2014USD ($) | Oct. 27, 2013USD ($) | Feb. 07, 2013employee | |
Guarantor Obligations [Line Items] | ||||
Total rent expense | $ 32 | $ 37 | $ 36 | |
Products warranty period, General | 12 months | |||
Maximum potential amount of future payments for letters of credit or other guarantee instruments | $ 58 | |||
Parent guarantees to banks | 100 | |||
Number of employees acquitted | employee | 9 | |||
Number of employees found guilty | employee | 1 | |||
Financial Guarantee | Wholly owned foreign subsidiary | ||||
Guarantor Obligations [Line Items] | ||||
Other debt | $ 800 |
Warranty, Guarantees, Commitm99
Warranty, Guarantees, Commitments and Contingencies (Future Minimum Lease Payments) (Details) $ in Millions | Oct. 25, 2015USD ($) |
Future minimum lease payments | |
2,016 | $ 25 |
2,017 | 16 |
2,018 | 8 |
2,019 | 5 |
2,020 | 3 |
Thereafter | 4 |
Total | $ 61 |
Warranty, Guarantees, Commit100
Warranty, Guarantees, Commitments and Contingencies (Warrenty Reserves) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Oct. 25, 2015 | Oct. 26, 2014 | Oct. 27, 2013 | |
Changes in the warranty reserves | |||
Beginning balance | $ 113 | $ 102 | $ 119 |
Provisions for warranty | 117 | 115 | 103 |
Consumption of reserves | (104) | (104) | (120) |
Ending balance | $ 126 | $ 113 | $ 102 |
Industry Segment Operations (Na
Industry Segment Operations (Narrative) (Details) | 12 Months Ended |
Oct. 25, 2015reportable_unitSegment | |
Segment Reporting [Abstract] | |
Number of reportable segments | Segment | 4 |
Number of reporting units | reportable_unit | 3 |
Industry Segment Operations (Re
Industry Segment Operations (Reportable Segment) (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Oct. 25, 2015 | Jul. 26, 2015 | Apr. 26, 2015 | Jan. 25, 2015 | Oct. 26, 2014 | Jul. 27, 2014 | Apr. 27, 2014 | Jan. 26, 2014 | Oct. 25, 2015 | Oct. 26, 2014 | Oct. 27, 2013 | |
Information for each reportable segment | |||||||||||
Net Sales | $ 2,368 | $ 2,490 | $ 2,442 | $ 2,359 | $ 2,264 | $ 2,265 | $ 2,353 | $ 2,190 | $ 9,659 | $ 9,072 | $ 7,509 |
Operating Income (Loss) | 1,693 | 1,520 | 432 | ||||||||
Depreciation/ Amortization | 371 | 375 | 410 | ||||||||
Capital Expenditures | 215 | 241 | 197 | ||||||||
Segment Assets | 15,308 | 13,174 | 15,308 | 13,174 | |||||||
Silicon Systems | |||||||||||
Information for each reportable segment | |||||||||||
Net Sales | 6,135 | 5,978 | 4,775 | ||||||||
Operating Income (Loss) | 1,410 | 1,391 | 876 | ||||||||
Depreciation/ Amortization | 268 | 268 | 260 | ||||||||
Capital Expenditures | 115 | 134 | 118 | ||||||||
Segment Assets | 5,464 | 5,508 | 5,464 | 5,508 | 5,525 | ||||||
Applied Global Services | |||||||||||
Information for each reportable segment | |||||||||||
Net Sales | 2,531 | 2,200 | 2,023 | ||||||||
Operating Income (Loss) | 664 | 573 | 436 | ||||||||
Depreciation/ Amortization | 10 | 11 | 13 | ||||||||
Capital Expenditures | 12 | 7 | 7 | ||||||||
Segment Assets | 2,254 | 2,042 | 2,254 | 2,042 | 1,958 | ||||||
Display | |||||||||||
Information for each reportable segment | |||||||||||
Net Sales | 780 | 615 | 538 | ||||||||
Operating Income (Loss) | 156 | 129 | 74 | ||||||||
Depreciation/ Amortization | 5 | 5 | 8 | ||||||||
Capital Expenditures | 13 | 4 | 6 | ||||||||
Segment Assets | 456 | 423 | 456 | 423 | 293 | ||||||
Energy and Environmental Solutions | |||||||||||
Information for each reportable segment | |||||||||||
Net Sales | 213 | 279 | 173 | ||||||||
Operating Income (Loss) | (61) | 15 | (433) | ||||||||
Depreciation/ Amortization | 7 | 9 | 22 | ||||||||
Capital Expenditures | 3 | 1 | 1 | ||||||||
Segment Assets | 118 | 173 | 118 | 173 | 183 | ||||||
Total Segment | |||||||||||
Information for each reportable segment | |||||||||||
Net Sales | 9,659 | 9,072 | 7,509 | ||||||||
Operating Income (Loss) | 2,169 | 2,108 | 953 | ||||||||
Depreciation/ Amortization | 290 | 293 | 303 | ||||||||
Capital Expenditures | 143 | 146 | 132 | ||||||||
Segment Assets | $ 8,292 | $ 8,146 | $ 8,292 | $ 8,146 | $ 7,959 |
Industry Segment Operations (In
Industry Segment Operations (Income Loss by Segment) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Oct. 25, 2015 | Oct. 26, 2014 | Oct. 27, 2013 | |
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | |||
Income from operations | $ 1,693 | $ 1,520 | $ 432 |
Total segment | |||
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | |||
Income from operations | 2,169 | 2,108 | 953 |
Corporate and unallocated costs | |||
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | |||
Income from operations | (515) | (540) | (462) |
Restructuring charges and asset impairments | |||
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | |||
Income from operations | 0 | (5) | (35) |
Certain items associated with terminated business combination | |||
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | |||
Income from operations | (50) | (73) | (17) |
Gain (loss) on derivatives associated with terminated business combination | |||
Segment Reporting, Reconciling Item for Operating Profit (Loss) from Segment to Consolidated [Line Items] | |||
Income from operations | $ 89 | $ 30 | $ (7) |
Industry Segment Operations (De
Industry Segment Operations (Depreciation and Amortization Expense) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Oct. 25, 2015 | Oct. 26, 2014 | Oct. 27, 2013 | |
Segment Reporting, Other Significant Reconciling Item [Line Items] | |||
Depreciation and amortization | $ 371 | $ 375 | $ 410 |
Operating Segments | |||
Segment Reporting, Other Significant Reconciling Item [Line Items] | |||
Depreciation and amortization | 290 | 293 | 303 |
Shared facilities and information technology assets | |||
Segment Reporting, Other Significant Reconciling Item [Line Items] | |||
Depreciation and amortization | $ 81 | $ 82 | $ 107 |
Industry Segment Operations (Ca
Industry Segment Operations (Capital Expenditures) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Oct. 25, 2015 | Oct. 26, 2014 | Oct. 27, 2013 | |
Segment Reporting, Other Significant Reconciling Item [Line Items] | |||
Capital expenditures | $ 215 | $ 241 | $ 197 |
Operating Segments | |||
Segment Reporting, Other Significant Reconciling Item [Line Items] | |||
Capital expenditures | 143 | 146 | 132 |
Shared facilities and information technology assets | |||
Segment Reporting, Other Significant Reconciling Item [Line Items] | |||
Capital expenditures | $ 72 | $ 95 | $ 65 |
Industry Segment Operations (Se
Industry Segment Operations (Segment Assets) (Details) - USD ($) $ in Millions | Oct. 25, 2015 | Oct. 26, 2014 |
Segment Reporting, Asset Reconciling Item [Line Items] | ||
Allowance for bad debts | $ (49) | $ (58) |
Deferred income taxes | 580 | 458 |
Common property, plant and equipment | 892 | 861 |
Total assets | 15,308 | 13,174 |
Operating Segments | ||
Segment Reporting, Asset Reconciling Item [Line Items] | ||
Total assets | 8,292 | 8,146 |
Shared facilities and information technology assets | ||
Segment Reporting, Asset Reconciling Item [Line Items] | ||
Cash and investments | 5,911 | 4,060 |
Allowance for bad debts | (49) | (58) |
Deferred income taxes | 458 | 299 |
Other current assets | 148 | 147 |
Common property, plant and equipment | 514 | 522 |
Other assets | $ 34 | $ 58 |
Industry Segment Operations (Ne
Industry Segment Operations (Net Sales and Long-lived Assets) (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Oct. 25, 2015 | Jul. 26, 2015 | Apr. 26, 2015 | Jan. 25, 2015 | Oct. 26, 2014 | Jul. 27, 2014 | Apr. 27, 2014 | Jan. 26, 2014 | Oct. 25, 2015 | Oct. 26, 2014 | Oct. 27, 2013 | |
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Net Sales | $ 2,368 | $ 2,490 | $ 2,442 | $ 2,359 | $ 2,264 | $ 2,265 | $ 2,353 | $ 2,190 | $ 9,659 | $ 9,072 | $ 7,509 |
Long-lived assets: | 956 | 924 | 956 | 924 | |||||||
United States | |||||||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Net Sales | 1,630 | 1,966 | 1,473 | ||||||||
Long-lived assets: | 705 | 636 | 705 | 636 | |||||||
Taiwan | |||||||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Net Sales | 2,600 | 2,702 | 2,640 | ||||||||
Long-lived assets: | 39 | 34 | 39 | 34 | |||||||
China | |||||||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Net Sales | 1,623 | 1,608 | 787 | ||||||||
Long-lived assets: | 46 | 61 | 46 | 61 | |||||||
Korea | |||||||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Net Sales | 1,654 | 965 | 924 | ||||||||
Long-lived assets: | 12 | 12 | 12 | 12 | |||||||
Japan | |||||||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Net Sales | 1,078 | 817 | 685 | ||||||||
Long-lived assets: | 6 | 5 | 6 | 5 | |||||||
Europe | |||||||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Net Sales | 642 | 658 | 680 | ||||||||
Long-lived assets: | 75 | 99 | 75 | 99 | |||||||
Southeast Asia | |||||||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Net Sales | 432 | 356 | 320 | ||||||||
Long-lived assets: | 73 | 77 | 73 | 77 | |||||||
Total outside United States | |||||||||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||||||||
Net Sales | 8,029 | 7,106 | $ 6,036 | ||||||||
Long-lived assets: | $ 251 | $ 288 | $ 251 | $ 288 |
Industry Segment Operations (Pe
Industry Segment Operations (Percentage by Customer) (Details) - Sales Revenue, Net - Customer Concentration Risk | 12 Months Ended | ||
Oct. 25, 2015 | Oct. 26, 2014 | Oct. 27, 2013 | |
Samsung Electronics Co., Ltd. | |||
Entity-Wide Revenue, Major Customer [Line Items] | |||
Concentration risk percentage | 18.00% | 12.00% | 13.00% |
Taiwan Semiconductor Manufacturing Company Limited | |||
Entity-Wide Revenue, Major Customer [Line Items] | |||
Concentration risk percentage | 15.00% | 21.00% | 27.00% |
Unaudited Quarterly Consolid109
Unaudited Quarterly Consolidated Financial Data (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 12 Months Ended | |||||||||
Oct. 25, 2015 | Jul. 26, 2015 | Apr. 26, 2015 | Jan. 25, 2015 | Oct. 26, 2014 | Jul. 27, 2014 | Apr. 27, 2014 | Jan. 26, 2014 | Oct. 25, 2015 | Oct. 26, 2014 | Oct. 27, 2013 | |
Unaudited Quarterly Consolidated Financial Data | |||||||||||
Net sales | $ 2,368 | $ 2,490 | $ 2,442 | $ 2,359 | $ 2,264 | $ 2,265 | $ 2,353 | $ 2,190 | $ 9,659 | $ 9,072 | $ 7,509 |
Gross profit | 959 | 1,018 | 1,016 | 959 | 959 | 992 | 1,001 | 891 | 3,952 | 3,843 | 2,991 |
Net income (loss) | $ 336 | $ 329 | $ 364 | $ 348 | $ 256 | $ 301 | $ 262 | $ 253 | $ 1,377 | $ 1,072 | $ 256 |
Diluted earnings (loss) per share (in dollars per share) | $ 0.28 | $ 0.27 | $ 0.29 | $ 0.28 | $ 0.21 | $ 0.24 | $ 0.21 | $ 0.21 | $ 1.12 | $ 0.87 | $ 0.21 |